Money & Banking

IDBI Bank net loss widens to ₹3,602 cr in Q2

Our Bureau Mumbai | Updated on November 14, 2018

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Lender expects further fund infusion from LIC; hopes to come out of PCA norms in a year

Net losses of public sector IDBI Bank registered a further rise in the second quarter although the lender hopes to move out of the prompt corrective action norms in a year with help from fund infusion from Life Insurance Corporation of India.

IDBI Bank on Wednesday reported net losses of ₹3,602.49 crore for the quarter ended September 30, 2018 on the back of higher provisioning. Its net losses were at ₹197.84 crore in the second quarter of last fiscal and at ₹2,409.89 crore as on June 30, 2018.

“IDBI Bank has been in the midst of consolidation. The higher provisioning is mainly due to MTM losses and ageing non-performing assets,” said Rakesh Sharma, Managing Director and CEO, IDBI Bank, adding that it expects to see recovery to the tune of ₹7,500 crore in the next two quarters, including ₹4,500 crore from cases under resolution at NCLT.

Total income fell 25.8 per cent to ₹6,162.14 crore in the July to September quarter this fiscal against ₹8,302.42 crore a year ago.

Its gross NPAs shot up to ₹60,875.49 crore as on September 30, or 31.78 per cent of gross assets as against 24.98 per cent a year-ago and 30.78 per cent on June 30, 2018. Similarly, net NPAs rose to ₹27,294.58 crore or 17.3 per cent of net assets as on September 30, 2018 compared to 16.06 per cent a year ago. But on a sequential basis, it was lower than 18.76 per cent on June 30, 2018.

Provisioning for NPAs for the second quarter almost doubled to ₹5,481.64 crore from ₹2,842.15 crore in the same period last fiscal. The overall provisioning and contingencies stood at ₹6,579.83 crore for the quarter, up from ₹3,261.42 crore in the year-ago period.

Acquisition of stake by LIC

The lender said it has received ₹2,098.19 crore from LIC in the second quarter of the fiscal and expects further fund infusion to the tune of ₹20,000 crore in the remaining part of the fiscal.

“LIC fund infusion will come at any time. We are awaiting a few more approvals, including from SEBI and the Competition Commission of India is pending,” said Sharma, adding that the open offer has been tentatively scheduled for December 4.

With plans to acquire 51 per cent stake in the public sector lender, LIC has increased its holding to 14.9 per cent and the Centre’s equity has come down to 79.5 per cent.

PCA norms

Sharma also expressed hope that the bank will be able to come out of the PCA norms by September 30, 2019. He estimated that the fund infusion from LIC will help improve the capital of the bank.

The lender also hopes to lower its NPA to less than six per cent in another three to four quarters with resolution and accelerated provisioning. It also hopes to turn in a profit by the first quarter of 2019-20.

Shares of IDBI Bank gained one per cent and closed at ₹60.50 apiece on the BSE.

Published on November 14, 2018

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