Money & Banking

Interest income lifts IDBI Bank profit 58%

Our Bureau Mumbai | Updated on January 28, 2011

Mr R.M. Malla (right), CMD, IDBI Bank, with Mr B.P. Singh, Deputy MD, during the announcement of the bank’s results in Mumbai on Thursday. — Shashi Ashiwal   -  Business Line



In a bid to improve its margins and profitability, IDBI Bank has decided not to renew low-yielding short-term advances, focus on better yielding long-term advances, and gradually shed high-cost bulk deposits.

In its pursuit to achieve industry standards on margins and profitability, the public sector bank plans to ease up on the credit growth pedal at a time when fixed deposit rates have moved north in the last couple of months.

“We would like to have moderate credit growth of 10-12 per cent by March-end 2011. This is not because credit proposals are not forthcoming. It has more to do with our wanting to focus on the net interest margin and profitability and reach industry standards,” said Mr R.M. Malla, Chairman & Managing Director.

Though the bank will continue to be active as a lead arranger for syndicating corporate loans so that fee income is augmented, it will down-sell a major chunk of these loans to other banks, retaining about 20 per cent of the loan amount on its books, he added.

The bank wants to double the share of low-cost current account and savings bank account deposits from 15 to 30 per cent of the total deposits in the next two years. It expects to improve its net interest margin, currently at 2.28 per cent (as of December-end 2010), to the industry average of 3-3.50 per cent in 18-24 months.

Meanwhile, IDBI Bank has reported a 58 per cent increase in its third-quarter net profit at Rs 454 crore (Rs 287 crore in Q3FY10) on the back of a 68 per cent jump in net interest income to Rs 1,204 crore (Rs 717 crore).

Shares of the bank ended 6 per cent lower on BSE to close at Rs 142.55, compared with the previous close of Rs 151.80.

Published on January 27, 2011

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