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IDBI Bank reported its 10th consecutive quarterly loss in the March 2019 quarter, even as the top management said it would turn profitable in the third quarter on the back of huge recoveries and monetisation of non-core assets.
PCA framework
The bank also expects to come out of the restrictive prompt corrective action (PCA) framework by the third or fourth quarter of the current financial year.
The bank, in which Life Insurance Corporation of India holds 51 per cent stake, reported a net loss of ₹4,918 crore, against a net loss of ₹5,663 crore earlier.
Loan-loss provisions jumped to ₹7,233 crore in the reporting quarter, against ₹5,075 crore in the preceding quarter. Net interest income rose 76 per cent year-on-year (y-o-y) to ₹1,609 crore in the reporting quarter, against ₹915 crore in the year-ago period. Other income was down 57 per cent y-o-y to ₹1,153 crore (₹2,701 crore in the year-ago quarter).
Rakesh Sharma, Managing Director, said IDBI Bank will bring down its net non-performing assets (NNPAs) to below 9 per cent of net advances in the June 2019 quarter and below 6 per cent in the September 2019 quarter.
NNPAs declined to 10.11 per cent in the March 2019 quarter, against 16.69 per cent in the year-ago quarter. Provision coverage ratio improved to 82.88 per cent from 63.40 per cent.
Sharma said the bank has set a recovery target of ₹13,000 crore, including from the large stressed accounts referred to the National Company Law Tribunal, in FY2020.
The bank is expecting to raise up to ₹7,000 crore via qualified institutional placement; ₹2,500-3,000 crore via Tier-II bonds; and ₹1,500-2,000 crore via sale of non-core assets.
Gurudeo M Yadwadkar, Deputy Managing Director, said the bank will complete the sale of its 66.67 per cent stake in IDBI Asset Management Company in the next couple of quarters.
Further, the bank has re-started the process of selling, either partly or fully, its 48 per cent stake in IDBI Federal Life Insurance Company.
During the quarter, two accounts, aggregating ₹1,781 crore slipped for the first time.
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