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IDBI Bank reported a net profit of ₹378 crore in the third quarter ended December 31, 2020, against a net loss of ₹5,763 crore in the year-ago period.
The bottomline was buoyed by a 89 per cent year-on-year (y-o-y) decline in provisions for bad loans, ₹105 crore write-back in provisions for depreciation in investments, and ₹323-crore profit the bank booked by selling a portion of its stake in its life insurance joint venture.
Net interest income (difference between interest earned and interest expended) was up 18 per cent y-o-y at ₹1,810 crore (₹1,532 crore in the year-ago period).
Other income, including income from activities such as commission, fees, earnings from foreign exchange and derivative transactions, profit and loss from sale of investments and recoveries from written off accounts, increased 7 per cent yoy to ₹1,368 crore (₹1,279 crore).
Bad loans
Gross non-performing assets (GNPAs) declined ₹3,532 crore during the reporting quarter. Rakesh Sharma, MD and CEO, said recoveries have been good during the reporting quarter, with the with the bank being able to make recoveries of around ₹961 crore.
“Recovery (collection) ratio has been almost equal to pre-Covid level. Pre-Covid it was around 95 per cent. Now it is 94 per cent,” he added.
GNPAs declined to 23.52 per cent of gross advances as at December-end 2020 against 25.08 per cent as of September-end 2020.
Net NPAs declined to 1.94 per cent of net advances as of December-end 2020 against 2.67 per cent as of September-end 2020.
With proforma slippages (adjusted for the Supreme Court’s interim order), Gross and Net NPA ratio would have been 24.33 per cent and 2.75 per cent, respectively.
Sharma observed that if there was no stay on recognition of NPAs, the slippages would have been ₹1,294 crore, which is well within the limit.
Restructuring
The IDBI Bank chief said: “We had (earlier) indicated that restructuring will be around 5-6 per cent of our total standard advances.
“But the total restructuring in our case will not exceed 2.5 per cent. For this we have already made good Covid-related provisions.”
So far, the bank has completed Covid-19-related restructuring of loan accounts aggregating ₹704 crore, comprising mainly structured retail loans (₹675 crore, within this ₹574 crore is home loans) and the balance is MSME accounts.
Restructuring of accounts aggregating ₹2,256 crore is in the pipeline.
Provisions
A break-up of the provisions shows that provisions towards NPAs and bad debts written-off declined to ₹49 crore (₹440 crore) and ₹208 crore (₹332 crore), respectively.
However, provisions towards standard assets rose to ₹624 crore (₹68 crore).
In its notes to accounts, the bank said it has made additional provision of ₹941 crore over and above the IRAC/ income recognition and asset classification norms (includes shifting of ICA/ Inter-Creditor Agreement provision of ₹395 crore to IRAC provision) in respect of certain borrower accounts in view of the inherent risk and uncertainty of recovery in these identified accounts.
Global gross advances were down 7 per cent y-o-y to stand at ₹1,59,663 crore. This was mainly due to 18 per cent y-o-y decline in corporate advances. Retail advances edged up 1 per cent.
Total deposits increased about 3 per cent y-o-y to ₹2,24,399 crore. The share of low-cost of current account, savings account (CASA) in total deposits improved to 48.97 per cent from 47.65 per cent in the year ago quarter.
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