The Hindu Business Line : IDBI net up 12%; other income rises

Mumbai, Oct. 16 IDBI Ltd saw an increase of 12 per cent in net profit at Rs 156 crore for the quarter ended September 30, 2007 against Rs 139 crore last year, on the back of growth in business and other income.

As IDBI completed the merger with United Western Bank on October 3, 2006, the results for the quarter ended September 2007 are not comparable with that for the quarter ended September 2006, the bank said in a notice to the Bombay Stock Exchange.

While IDBI’s net interest income grew only 7.4 per cent to Rs 145 crore, other income grew 140 per cent to Rs 463 crore (Rs 193 crore).

“We booked capital gains by sale of shares when the equity market was good,” said Mr R K Bansal, Chief Financial Officer, IDBI.

Total deposits grew 61 per cent to Rs 50,002 crore, (Rs 30,953 crore) and total advances grew 15 per cent to Rs 62,353 crore, (Rs 54,309 crore).

Mr Bansal said, “The deposits in September 2006 do not include UWB’s deposits. If that were included, it would have been around Rs 37,000 crore, in which case the growth would not have been so high. Our target is 50 per cent growth in deposits by March 2008.”

About the advances growth, he said there was a slowdown in credit offtake till August, which was the case with other banks as well. But it has picked up in September.

The bank has set a target of 25 per cent growth in advances this fiscal.

Cost of funds increased to 7.72 per cent (6.66 per cent), due to the high cost borrowings of the erstwhile IDBI, Mr Bansal said.

“Also, as our retail network is small, our share of low cost savings and current accounts is low. Therefore, we rely more on term deposits, which also pushes up the cost of funds,” he pointed out.

It is planning to open 45 new branches by December 2007, in addition to the 453 it currently has.

Capital adequacy ratio is 14.1 per cent (14.66 per cent) and the percentage of net non-performing assets to total assets is 1.11 per cent (1.29 per cent).

The target is bring down NPAs to 1 per cent or lower this fiscal through recovery, making higher provisions and preventing slippages, Mr Bansal said.

On Tuesday, shares of IDBI closed at Rs 141.7 down 4.09 per cent from the earlier close of Rs 147.75 on the BSE.

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