IDBI Bank posts Rs 378-crore profit on higher NII

IDBI Bank on Thursday posted a net profit of Rs 378 crore for the December quarter, as against a loss of Rs 5,763 crore a year ago, on the back of an 18% year-on-year (y-o-y) rise in the net interest income (NII) to Rs 1,810 crore.

The private lender’s pre-provisioning operating profit rose 28% y-o-y to Rs 1,639 crore. The net interest margin (NIM) stood at 2.87%, up 17 basis points (bps) sequentially. The lender’s provisions rose 52.5% y-o-y to Rs 796 crore in Q3FY21. The gross non-performing asset (NPA) ratio fell 156 bps sequentially to 23.52% in Q3FY21, while the net NPA ratio improved 73 bps sequentially to 1.94% in the December quarter.

Had the bank classified borrower accounts as non-performing assets (NPAs) after August 31, 2020, in the absence of a judicial stay, its proforma gross NPA ratio and proforma net NPA ratio would have been 24.33% and 2.75% respectively. The provision coverage ratio (PCR) improved to 97.08% as on December 31, 2020, from 95.96% as on September 30, 2020. Slippages amounted to Rs 35 crore, down from Rs 79 crore in Q1FY20. Proforma slippages stood at Rs 1,294 crore.

Rakesh Sharma, managing director and chief executive officer, IDBI Bank, said that the bank has already completed restructuring worth Rs 704 crore and another Rs 2,556 crore is in the pipeline. The total restructured accounts would amount to Rs 2,960 crore, or 2.42% of the bank’s standard asset book.

“The Rs 704 crore which has been done is mainly retail, out of which Rs 675 crore is structured retail assets, Rs 574 crore is home loans and only around Rs 30 crore is from MSME (micro, small and medium enterprises). MSMEs can apply up to March 31, but we do not expect it (restructured assets) to go beyond Rs 3,000 crore. That means it will be less than 2.5% of the portfolio,” Sharma said.

Gross advances fell 7% to Rs 1.6 lakh crore (y-o-y) in December 2020. Retail loans accounted for 60% of the total loan book, with the rest being corporate loans. The bank’s total deposits rose 2.85% y-o-y to Rs 2.24 lakh crore at the end of December 2020. The share of current accounts savings accounts (CASA) in total deposits improved to 48.97% as on December 31, 2020, from 47.65% as on December 31, 2020.

The bank’s management said that it now fulfils all parameters required to exit the prompt corrective action (PCA) framework. It is capital to risk-weighted assets ratio (CRAR), including countercyclical buffer (CCB) stood at 14.77%, against the regulatory minimum of 11.5%. Its net NPA ratio was at 1.94% against a required 6%, and its return on assets (RoA) for Q3 stood at 0.51%. Its leverage ratio stood at 5.71%, as against a minimum of 4%.
Shares of IDBI Bank ended at Rs 28.30 on the BSE on Thursday, up 2.17% from their previous close.