Financial Daily from THE HINDU group of publications
Wednesday, Jan 30, 2002
Corporate Results - Financial Institutions
Money & Banking - Financial Institutions
IDBI third-quarter net plunges 77 pc
MUMBAI, Jan. 29
INDUSTRIAL Development Bank of India (IDBI) has taken a hard knock on its bottomline with net profit for the third quarter plunging to less than a fourth compared year on year. The institution's total assets have also contracted three per cent year on year.
The net profit for the quarter ended December 31, 2001, has fallen 77 per cent to Rs 35.2 crore compared to Rs 154.8 crore for the quarter ended December 31, 2000.
Mr A.K. Doda, Executive Director, IDBI, attributing the fall in net profit to low business growth and increased provisioning, said in the immediate future, IDBI's strategy would be to focus on fresh assistance to less risky sectors, increased recoveries and cost-cutting. Provisions for bad and doubtful debts for the quarter stood at Rs 217.3 crore (Rs 197.3 crore). Mr Doda said the institution is facing stiff competition from banks at the short end of the lending spectrum. "My average cost of funds is close to 10 per cent whereas that of commercial banks' is seven per cent. At the long end we can still compete, but it is becoming increasingly difficult to manage in short-term. Industrial slowdown is adding to our troubles," he said.
IDBI's total assets stood at Rs 70,130.2 crore as on December 31, 2001 compared to Rs 72,523 crore on December 31, 2000.
The institution's income from operations has dropped nine per cent to Rs 1,909.4 crore (Rs 2,120.3 crore). Other income fell to Rs 21.3 crore (Rs 39.2 crore).
The financial institution's sanctions and disbursements have also declined considerably, which it said "partly reflects its strategy to be selective in accepting new business." Sanctions (for nine months) under project finance, IDBI's core business, were Rs 4,563.2 crore (Rs 8,180.5 crore) and disbursements were Rs 2,570 crore (Rs 3,737.2 crore).
Aggregate sanctions too dropped to Rs 14,947 crore (Rs 19,104.9 crore).
IDBI said the slowdown in project finance can be "attributed to slowdown in sanctions to infrastructure projects and decline in demand from traditional industries."
The reason for decline in disbursements was "availability of cheaper funds in the market and also delays in project implementation due to depressed business sentiments," Mr Doda said.
The institution incurred total expenditure of Rs 66.4 crore (Rs 65 crore) during the quarter but interest cost declined to Rs 1,556.9 crore (Rs 1,671.4 crore).
IDBI's earnings per share stood at a paltry Rs 0.54 as on December 31, 2001, compared to Rs 2.22 as on December 31, 2000.
The company's share closed at Rs 14.60 on the BSE on Tuesday compared to Monday's close of Rs 14.55.
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