The Hindu Business Line : IDBI Bank Q4 net surges 15% on higher interest income

Mumbai, April 26 IDBI Bank reported a 15 per cent increase in net profit at Rs 245 crore for the fourth-quarter ended March 31, 2008, against Rs 214 crore in the corresponding quarter last year, due to higher interest income and fee income.

The bank’s board has recommended a dividend of Rs 2 for the fiscal 2007-08.

As the bank opened 60 branches last year, its operating expenses went up, said Mr Yogesh Agarwal, Chairman and Managing Director, IDBI Bank.

The net interest margin (NIM) fell to 0.68 per cent (0.8 per cent), due to higher interest rates offered on deposits.

“We are struggling with NIM of less than one per cent. We can grow it only when we expand our retail branch network,” Mr Agarwal said.

Cost of funds also increased to 8.72 per cent (7.24 per cent).

Net NPAs also increased marginally to 1.30 per cent (1.12 per cent), because of a few cases of slippages.

“One particular account in the last quarter was the cause for the NPA. It is approximately worth Rs 260 crore,” said Mr Agarwal.

The bank’s clients are facing a marked-to-market loss of Rs 173 crore in their currency transactions, as on March 31, 2008. But the bank has not made any provision as no corporate has defaulted, he added. IDBI Bank has 41 clients in currency derivatives and most of them are large corporates.

The bank also saw good income from sale of equity at Rs 1,168 crore as part of its other income in the fourth quarter.

For the just-ended fiscal, the share of CASA to total deposits was 16.56 per cent (25 per cent). This is because the deposit base increased by 68.38 per cent in FY 2007-08, Mr Agarwal said.

It is aiming to increase its low-cost CASA (current account saving account) to more than 20 per cent this fiscal.

Overseas branches

The bank is planning overseas branches in Singapore, Dubai and Shanghai.

It will look at the small and medium enterprises segment as a thrust area, which will also help increase the share of current accounts, Mr Agarwal said.

On Friday, shares of IDBI Bank closed at Rs 103.9, up 1.76 per cent from its previous close of Rs 102.1, on the BSE.

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