IDBI Bank aims to bring down GNPAs to below 14% by FY23-end

IDBI Bank is planning to bring down its gross non-performing assets (GNPAs) to below 14 per cent of gross advances by March-end 2023, and below 12 per cent by March-end 2024, according to MD and CEO Rakesh Sharma.

As at March-end 2022, GNPAs were at 19.14 per cent against 22.37 per cent as at March-end 2021.

“Our GNPAs did not come down because we did not do technical write-off (because of tax purposes) and some of the (stressed) assets, which we had thought of transferring to NARCL (National Asset Reconstruction Company Ltd), did not happen.

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“But during the current year, this (assets transfer to NARCL) will happen and we will be able to bring down GNPA. If we do technical write-off of all 100 per cent provided NPA accounts, our GNPA will come down to less than 2 per cent,” said Sharma at a press conference today.

Turnaround complete

He emphasised that the turnaround of IDBI Bank’s has now really happened and the balance sheet has started growing after a gap of almost four years.

“We have recorded full year net profit for continuous two years. ROA (return on assets) of 0.84 per cent and ROE (return on equity) of 13.60 is quite good keeping in view the fact that the bank was having issues during the last four years,” said the IDBI Bank chief.

Overall, the bank, which clocked credit growth of about 14 per cent in FY22, expects credit growth of 10-12 per cent in FY23.

IDBI Bank is looking to improve its financials further, targetting RoA and RoE of above 1 per cent and 14 per cent, respectively, in FY23.

LIC stake dilution

On the possible impact of the proposed disinvestment/dilution of Life Insurance Corporation of India’s (LIC) 49.24 per cent in IDBI Bank, Sharma underscored that IDBI Bank’s relationship with LIC is towards the cross-selling part (bancassurance, collecting premiums, opening agents accounts, etc).

“It is a win-win situation for both the organisations. So, hopefully, after disinvestment of LIC’s stake in IDBI Bank, the relationship will continue as it is. As such, business-wise, it will not have any impact…IDBI Bank will continue to be a board-driven, professionally run organisation,” he said.

The share of LIC in IDBI Banks low-cost Current Account, Savings Account (CASA) deposits is less than 3 per cent. Similarly, on the advances front, the advances which IDBI Bank has given to LIC agents or their employees is less than 1 per cent.

Monetising non-core assets

On sale of non-core assets, Sharma said, going by the bank’s financial strength (ROA is 0.84 and Capital Adequacy Ration at 19 per cent), there is no compulsion on the bank to sell these assets (IDBI Mutual Fund, Ageas Federal Life, ARCIL and NSDL)

Monetising the non-core assets is not for raising funds but to comply with legal requirements.

Samuel Joseph, Deputy Managing Director, IDBI Bank, said, “We are seeing some greenshoots in private sector investment cycle. So, we are hopeful that the corporate book will grow across the banking sector, including for us.”

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