The Hindu Business Line : IDBI net 6 pc higher in Q2

IDBI Ltd's net profit moved up marginally by 6 per cent to touch Rs 139.4 crore (Rs 131.84 crore) for the second quarter ended September 30. The bank reported a fall in other income to Rs 192.61 crore (Rs 344.90 crore), as it did not avail itself of the market conditions to unload its equity holdings against conversion of loans.

Last year the bank had made a treasury profit of Rs 192 crore from its long-term equity portfolio, which was a part of other income.

"Even though we had some opportunity this year, we decided not to use it due to strategic reasons," said a senior official from the bank.Deposits increased by 71 per cent to Rs 30,953 crore as on September 30, (Rs 18,158 crore) and advances by 17 per cent to Rs 54,309 crore (Rs 46,413 crore).

Mr V.P. Shetty, Chairman and Managing Director, said the difference in advances and deposit growth follows the lower deposit base. "Our target is to have Rs 60,000 crore in advances and Rs 35,000 crore in deposits by the end of this year," he said.

IDBI's branch network has increased to 430 following the merger with United Western Bank. This larger reach will help IDBI improve its deposit base. "We don't have many branch licences and our request with the Reserve Bank if India is pending. But as we are closer to our target of having 500 branches by 2008, we will need to plan our strategy," Mr Shetty said.

The bank improved its cost of funds to 6.66 per cent (7.19 per cent). Treasury income increased to Rs 650.59 crore (Rs 324.6 crore).

For the six-month period ended September 30, 2006, the bank had a net profit of Rs 289.97 crore (Rs 240.35 crore).

Life insurance foray

IDBI has signed an agreement with Fortis and Federal Bank for setting up a life insurance company. Its stake in the joint venture would be 48 per cent. While IDBI is looking at March 2007 for starting operations, it could be delayed due to regulatory clearances, Mr Shetty said.

Shares of IDBI closed at Rs 78.4 down 2.43 per cent from the previous close of Rs 80.35 on the BSE.

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