The Hindu Business Line : IDBI Bank net up 6% in Q4 on interest income

`ALL ROUND PROGRESS': Mr V.P. Shetty (right), Chairman & Managing Director, IDBI Bank, and Mr O.V. Bundellu, Deputy Managing Director, at a press meet in Mumbai on Friday. - Shashi Ashiwal

Mumbai April 20 IDBI Bank plans to raise over $1 billion through overseas debt for expanding its business, said a senior official from the bank. IDBI Bank has registered a growth of 6 per cent in net profit at Rs 213 crore for the quarter ended March 31, 2007, against Rs 201 crore in the corresponding quarter of the previous year. The rise in the Bank's net profit was mainly due to an increase in interest income.

The bank's results cannot, however, be effectively compared to the year ago period owing to the merger of United Western Bank with IDBI Bank, effective October 3, 2006.

In the fourth quarter of the recently concluded fiscal, the bank's interest income jumped 15 per cent to Rs 1,814 crore from Rs 1,574 crore in the previous year. Total income increased 12 per cent to Rs 2,185 crore (Rs 1,944 crore) and total expenses also rose to Rs 1,807 crore (Rs 1,542 crore). Net interest income has, however, fallen by 36.5 per cent to Rs 213 crore (Rs 335 crore).

In 2006-07, IDBI Bnk's net profit was up 12.3 per cent to Rs 630 crore against Rs 561 crore last year.

`Progress achieved'

"We have achieved progress in all performance parameters. The acquisition of United Western Bank has added over Rs 6,000 crore to our deposits and Rs 3,000 crore to advances," said Mr V.P. Shetty, Chairman and Managing Director, IDBI Bank.

As of March 31, 2007, IDBI Bank's total business (deposits and advances) grew by 34.4 per cent to Rs 1,05,825 crore against Rs 78,739 crore the previous year. In 2006-07, deposits registered a growth of 66.7 per cent to Rs 43,354 crore, against Rs 26,000 crore in the previous year. Low-cost deposits (current account and savings account deposits) now account for 25 per cent of total deposits while retail deposits contributed 27 per cent to the total deposits.

The bank's advances increased 18.4 per cent to Rs 62,471 crore. The growth in advances in the fourth quarter of 2006-07 against the third quarter of the fiscal was, however, just 4 per cent with the incremental increase standing at Rs 2,000 crore.

The acquisition of United Western Bank has marked up the bank's net NPAs to 1.12 per cent (1.01 per cent). The bank's net interest margin improved to 0.8 per cent at the end of fiscal 2006-07 from 0.49 per cent in the previous year. The capital adequacy ratio has fallen to 13.73 per cent (14.8 per cent).

"We are still examining the issue of whether we should grant some concessions to smaller advances," Mr Shetty said. He said the cost of resources was going up and the impact of rising interest rates will be felt from the current quarter onwards. The bank's cost of funds is around 6.83 per cent.

Mr Shetty said interest rates have peaked and with all the steps taken by the RBI, inflation is likely to come down.

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