Resolution of large cases will help IDBI Bank come out of red
, ET Bureau|
Updated: Nov 01, 2017, 07.47 PM IST
Resolution of the large cases that have gone to the bankruptcy court will be the key enabler for the government owned IDBI Bank to come out of red, said M K Jain, CEO of IDBI in an exclusive interview with ET.
The bank, which reported highest ratio of bad loans of 25% reported Rs 198 crore loss in the second quarter of this fiscal year. In the corresponding quarter last year the bank had reported net profit of Rs 55 crores however in June 2017 quarter the losses were much higher at Rs 853 crores.
“When there will be a reversal trend or resolution of these NCLT accounts (list 1 and list 2) which constitute 55% of non-performing loans (NPL) book, the bank will be in black,” Jain said. “With all strategies, I am fairly confident that we would be able to register 20-22% growth on operating profit from core business despite the bottleneck in terms of assets that are not realising any interest. A lot is dependent on credit cost on existing NPL book because provision on ageing loans will continue till there is resolution.” He also said that the bank will sell close to Rs 2000 crore of non core assets this fiscal year.
The bank had reported that it's share of bad loans has touched 24.9% and after provisions it stands at 16%. The share of bad loans does not include restructured loans which are also facing problems in paying dues. Provisions for these bad loans more than doubled over corresponding period while a dip in loan book affected their earnings.
Provisions stood at Rs 3256 crores in second quarter as against Rs 1349 crores in comparable quarter last year. The total loan book stood at Rs 183567 crores as against Rs 218672 crores a year ago.
The losses of the bank narrowed over June quarter as it's sold stake in its subsidiaries and earned Rs 1337.4 crores. The bank sold 10% it's stake in Sidbi for Rs 1266 crores and 2.5% in Clearing Corporation of India for Rs 71 crores.
The Reserve Bank of India has initiated prompt corrective action on IDBI Bank after it saw a sharp rise in bad loans while the government replaced the Chief Kishor Kharat with M K Jain, who has more years to go before retirement.
The bank, which reported highest ratio of bad loans of 25% reported Rs 198 crore loss in the second quarter of this fiscal year. In the corresponding quarter last year the bank had reported net profit of Rs 55 crores however in June 2017 quarter the losses were much higher at Rs 853 crores.
“When there will be a reversal trend or resolution of these NCLT accounts (list 1 and list 2) which constitute 55% of non-performing loans (NPL) book, the bank will be in black,” Jain said. “With all strategies, I am fairly confident that we would be able to register 20-22% growth on operating profit from core business despite the bottleneck in terms of assets that are not realising any interest. A lot is dependent on credit cost on existing NPL book because provision on ageing loans will continue till there is resolution.” He also said that the bank will sell close to Rs 2000 crore of non core assets this fiscal year.
The bank had reported that it's share of bad loans has touched 24.9% and after provisions it stands at 16%. The share of bad loans does not include restructured loans which are also facing problems in paying dues. Provisions for these bad loans more than doubled over corresponding period while a dip in loan book affected their earnings.
Provisions stood at Rs 3256 crores in second quarter as against Rs 1349 crores in comparable quarter last year. The total loan book stood at Rs 183567 crores as against Rs 218672 crores a year ago.
The losses of the bank narrowed over June quarter as it's sold stake in its subsidiaries and earned Rs 1337.4 crores. The bank sold 10% it's stake in Sidbi for Rs 1266 crores and 2.5% in Clearing Corporation of India for Rs 71 crores.
The Reserve Bank of India has initiated prompt corrective action on IDBI Bank after it saw a sharp rise in bad loans while the government replaced the Chief Kishor Kharat with M K Jain, who has more years to go before retirement.
