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IDBI Bank expects gross non-performing assets (GNPAs) to decline below 17 per cent of gross advances by March-end 2022 and below 12 per cent by March-end 2023.
GNPAs declined to 20.56 per cent as at December-end 2021, against 21.85 per cent as at September-end 2021.
Rakesh Sharma, MD & CEO, IDBI Bank, said that once the transfer of stressed assets, aggregating about ₹11,000 crore to the National Asset Reconstruction Company Ltd (NARCL) happens, it will help bring down GNPAs by about 4 percentage points.
This transfer of stressed assets is expected to materialise by March-end. Referring to earlier recovery projection of ₹4,000 crore, Sharma emphasised that the bank has already made recoveries amounting to ₹4,334 crore.
“And we are quiet hopeful that we will be able to show recoveries of ₹5,000 crore for the full year (FY22),” he said.
Advances growth
The bank is eyeing a loan growth 8-10 per cent year-on-year (yoy) in FY22 and more than 10 per cent in FY23.
The IDBI Bank chief observed that during the last four years, when the bank was under the Reserve Bank of India’s Prompt Corrective Action (PCA) and even after that, there was de-growth in corporate advances.
But during the third quarter, the bank has shown 13 per cent yoy growth in mid-corporate advances.
“This (mid-corporate) has been our focus area also. We will be taking smaller exposure to good companies.
“Going forward, our policy is to grow quality advances to show reasonable, sustainable and calibrated growth…so that we don’t face slippages and stress. Looking at the Covid situation, we have to be quiet calibrated in our approach. We have to take calculated risks,” said Sharma.
Samuel Joseph, Deputy Managing Director, IDBI Bank, explained that most of the growth that has come in the mid-corporate advances segment is from the existing good clients.
These are the clients to whom the bank earlier was not able to enhance its pro-rata exposure in consortiums or multiple banking arrangements. In such cases, the bank has been able to take some incremental share.
Referring to the good corporate relationships IDBI Bank had lost during the PCA period as it was not able to give them the support they wanted, Joseph said: “we have, sort of, brought them back”.
He underscored that “these are clients with established track record with the Bank. We have also on-boarded a few new relationships which are well-rated and well-regarded”.
Loan composition
P Sitaram, ED & CFO, noted that the bank continues with its strategy of maximising growth in retail.
“We will also be growing the corporate book. Therefore, the current retail: corporate loan mix of 63:37 will shift to 55:45 over the medium term,” he said.
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