IDBI Bank reported its highest quarterly net profit at ₹927 crore in the third quarter on the back of healthy growth in net interest income (NII), sharp decline in loan-loss provisions and relatively lower tax expenses.

The third quarter net profit is up 60 per cent year-ago period’s ₹578 crore.

Net interest income (difference between interest earned and interest expended) was up 23 per cent y-o-y at ₹2,925 crore (₹2,383 crore in the year-ago period).

Non-interest income, comprising fee-based income, treasury income, and recovery in written off accounts, among others, was down 25 per cent y-o-y to ₹857 crore (₹1,138 crore). This is due to decline in both profit on sale of investments and recovery from written-off accounts, among others.

Provisions for non-performing assets declined to ₹233 crore (₹940 crore). Tax expense was lower at ₹340 crore (₹388 crore).

Net interest margin rose to 4.56 per cent from 3.31 per cent in the year-ago quarter.

Total deposits up

Total deposits increased by 5 per cent y-o-y to ₹2,32,671 crore as of December-end 2022. Within total deposits, the proportion on low-cost current account, savings account deposits declined to 54.44 per cent of total deposits against 54.69 per cent in the year-ago quarter.

Net advances rose by about 17 per cent y-o-y to ₹1,48,213 crore. Within this, structured retail assets (housing loan, loan against property, auto loan, education loan and personal loan) grew by about 15 per cent and corporate advances by about 20 per cent. 

Also read: NARCL acquires first stressed asset

Gross non-performing assets (GNPAs) position improved to 13.82 per cent of gross advances as at December-end 2022 against 16.51 per cent as at September-end 2022. Net NPAs too declined to 1.07 per cent of net advances against 1.15 per cent.

MD & CEO Rakesh Sharma emphasised that with a provision coverage of 98 per cent in December 2022 (against 97.10 per cent in December 2021) and capital to risk-weighted assets ratio of 20.14 per cent (16.75 per cent) the bank has further strengthened its balance sheet to face any future challenges.

Robust credit growth in the reporting quarter has prompted the bank to revise its credit growth projection for FY23 to 15 per cent from earlier forecast of 10-12 per cent.

On deposit growth lagging credit growth, Sharma said the bank is not averse to raising bulk deposits to bridge the gap.

The bank expects GNPAs to come down to below 10 per cent by March-end 2023 following transfer of a large account to the National Asset Reconstruction Company Ltd (NARCL). The bank had an exposure of ₹3,750 crore to this consortium account and NARCL has acquired the same at a 55 per cent haircut.

comment COMMENT NOW