IDBI Bank reported its highest-ever quarter net profit at ₹828 crore on the robust growth in net interest income (NII) and one-time gain from sale of its stake in life insurance joint venture.
The profitability came despite the bank making additional provisions for standard assets and other provisions for non-fund based limits.
The net profit in the reporting quarter is 46 per cent year-on-year (y-o-y) up vis-a-vis year ago period's ₹567 crore.
Expressing confidence about being able to sustain the current level of performance, Rakesh Sharma, MD & CEO, observed: "We do not expect any negative surprises. Moving forward, there will be lot of pleasant surprises."
Net interest income (difference between interest earned and interest expended) was up 48 per cent y-o-y to ₹2,738 crore (₹1,854 crore in the year-ago period).
Non-interest income increased by 11 per cent y-o-y to ₹1,087 crore (₹976 crore), with profit on sale of the bank's stake in life insurance joint venture fetching about ₹380 crore; commission, exchange and brokerage (₹481 crore) and profit on forex (Rs 142 crore).
Net interest margin (NIM) rose substantially to 4.37 per cent from 3.02 per cent in the year-ago quarter.
Loan loss provisions were down about 24 per cent at ₹2,816 crore (₹3,693 crore). The bank booked a write-back on investment of ₹113 crore (₹53 crore). Tax outgo was about 21 per cent less y-o-y at ₹652 crore (₹824 crore).
Gross non-performing assets (NPAs) declined to 16.51 per cent of gross advances as at September-end 2022 against 19.90 per cent in the preceding quarter.
Net NPAs declined to 1.15 per cent of net advances against 1.25 per cent.
Fresh slippages during the reporting quarter were low at Rs 524 crore (Rs 1,438 crore). Write-offs rose to Rs 5,209 crore (Rs 817 crore).
Overall, the bank made additional provisions towards standard assets and other provisions for non-fund based limits aggregating ₹681 crore.
Sharma said the bank is likely to transfer stressed assets aggregating ₹6,000-7,000 crore to the National Asset Reconstruction Company Ltd (NARCL). This will help bring down gross NPAs to 12.50 per cent by March-end 2023.
Net advances increased 17 per cent yoy to Rs 1,46,752 crore. Total deposits nudged up 3 per cent y-o-y to ₹2,30,310 crore.
The bank, in its presentation, said, looking ahead, focus areas will be to "Explore avenues to achieve business growth of 10 to 12 per cent...NPA to be gradually brought down with recovery target of ₹4,000 crore.
"Net NPA level to be maintained below 1.25 per cent...Focus on maximising fee income and maintaining NIM above 3.25 per cent."