The Hindu Business Line : IDBI Q3 net up 6 per cent

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Mumbai Jan. 22 IDBI Ltd has recorded an over 6 per cent rise in net profit to Rs 126.79 crore in the third quarter ended December 31, 2006, against Rs 119.3 crore in the year-ago period due to growth in total income and interest income.

However, the results cannot be compared to that of the period year-ago, owing to the merger of the United Western Bank into IDBI effective October 3, 2006. UWB is functioning as a separate strategic business unit (UBSBU). "Around Rs 19 crore of the net profit of the bank can be attributed to the UBSBU," said Mr V.P. Shetty, Chairman and Managing Director, IDBI Ltd, and agreed that the bank's results are almost flat if the profit from the merged unit is taken out.

Total income increased to Rs 1,877.65 crore against Rs 1,548.16 crore. Other income has dropped on account of low capital gains booked.

Deposits rose by 72 per cent to Rs 37, 591 crore, of which Rs 5,700 crore was contributed by the merger and advances grew by 21 per cent to Rs 60, 466 crore, of which Rs 3,000 crore can be attributed to the merger.

Retail revenue up

Retail banking is going to be a thrust area for the bank, said a senior bank official. The bank's retail revenue has jumped to Rs 603.67 crore (Rs 328.26 crore).

The bank's cost of funds has risen to 7.19 per cent. Mr Shetty admitted markets were going haywire as interest rates on deposits are on a rise putting pressure on the cost of funds. Net interest margin has improved to 1.02 per cent.

Other provisions and contingencies have gone up to Rs 49.68 crore, of which provisions for NPAs have been at Rs 29.18 crore. No provisions have been made for the NPAs of UBSBU in the third quarter. The bank also has a provision of Rs 26.76 crore for taxes.

The bank's NPAs is at 1.55 per cent (1.36 per cent) mainly on account of UBSBU, but the bank plans to bring it down in the next few months, said Mr Shetty. Cash recovery of about Rs 495 crore has helped the bottomline, he said. Its capital adequacy ratio stood at 14.09 per cent (15.9 per cent).

The bank has 432 branches, 19 extension counters and 514 ATMs. "We have received RBI's okay for 45 branches, 300 ATMs and regional processing units," said Mr Shetty.

The bank has also resolved the resettlement agreement with the employees' union on Saturday. The issue has been amicably resolved and the bank will give arrears from November 1, 2002, as per the agreement, which will be valid till October 2007.

IDBI Ltd's stock closed at Rs 93.90, down from the previous close of Rs 97.75.

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