Money & Banking

IDBI Bank net loss widens to ₹5,763 crore in Q3

Mumbai | Updated on February 11, 2020 Published on February 11, 2020

IDBI Bank’s net loss widened to ₹5,763 crore in the third quarter ended December-end 2019 against ₹4,185 crore in the year-ago period. The LIC-promoted bank attributed the loss mainly to the exercise of the option of lower tax rate, leading to a one-time hit of ₹6,273 crore.

Rakesh Sharma, MD and CEO, emphasised that but for this one-time hit, the bank would have posted a net profit of ₹418 crore. He added that the bank has witnessed a turnaround at the profit before tax (PBT) level after 12 consecutive quarters of losses. PBT in the reporting quarter was at ₹756 crore against a loss of ₹5,805 crore in the year-ago quarter.

Recovery

Sharma observed that barring one parameter (return on assets), IDBI Bank has complied with the remaining three parameters (capital, asset quality and leverage) to come out of Reserve Bank of India’s restrictive prompt corrective action framework. The bank made an overall recovery of ₹3,136 crore in the quarter, including in Essar Steel (₹2,255 crore), and other accounts referred to the National Company Law Tribunal.

Net interest income (the difference between interest earned and interest expended) improved 13 per cent year-on-year (y-o-y) at ₹1,532 crore (₹1,357 crore in the year-ago quarter). Despite a 10 per cent decline in interest income, NII was supported by an 18 per cent decline in interest expenses.

Non-interest income jumped 83 per cent y-o-y to ₹1,278 crore against ₹698 crore in the year-ago period.

The bank made accelerated provision of ₹1,679 crore towards non-performing assets (NPAs). This helped it to reduce the net NPAs to net advances ratio to 5.25 per cent in the reporting quarter from 5.97per cent in the preceding quarter and 14.01 per cent in the year-ago quarter.

The provision coverage ratio increased to 92.41per cent, which is one of the highest in the industry, from 75.21 per cent in the year-ago quarter. The net NPA has come down to ₹6,805 crore (against ₹21,360 crore in the year-ago period) and the provision for the same will be spread over the next three to four years.

Of the gross NPA of ₹49,503 crore (₹52,053 crore in the preceding quarter), the bank has made 100 per cent provisioning on ₹36,306 crore, said Sharma. Recoveries and upgradation (₹3,431 crore) were higher than the slippages (₹2,113 crore includes two accounts aggregating ₹1,295 crore) in the reporting quarter. Write-offs amounted to ₹2,239 crore (₹384 crore in the preceding quarter).

Excluding these two accounts, which also includes a large non-banking finance company, slippages were at ₹818 crore. Sharma said the bank’s endeavour is that slippages should not be more than ₹800 crore every quarter. The bank expectsup to ₹1,300 crore via sale of NPAs to asset reconstruction companies in the reporting quarter.

Published on February 11, 2020
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