IDBI Bank net profit soars 318% to ₹603 crore in Q1 FY22
The bank had reported a net profit of ₹144 crore in the year ago quarter
IDBI Bank’s first-quarter standalone net profit soared 318 per cent year-on-year (y-o-y) to ₹603 crore on the back of healthy growth in net interest income (NII) and other income.
Both NII and other income were boosted as the bank realised ₹733 crore from the Kingfisher Airlines account via sale of United Breweries shares. The bank had reported a net profit of ₹144 crore in the year ago quarter.
In the first quarter ended June 30, 2021, net interest income (NII) was up 41 per cent y-o-y to ₹2,506 crore (₹1,772 crore in the year ago quarter).
Other income, comprising income from activities such as commission, fees, earnings from foreign exchange and derivative transactions, profit/ loss from sale of investment and recoveries from written off accounts, jumped 63 per cent y-o-y to ₹1,639 crore (₹1,005 crore).
‘NPAs expected to decline’
Rakesh Sharma, MD & CEO, observed that gross non-performing assets (NPAs) are expected to decline to less than 15 per cent of gross advances by March-end 2022 from 22.71 per cent as on June-end 2021 due to growth in the denominator (8-10 per cent projected growth in advances) and transfer of stressed assets (live accounts) aggregating ₹7,000-8,000 crore to the National Asset Reconstruction Company Ltd (NARCL).
“Overall assets aggregating ₹11,000-12,000 crore, including stressed accounts (live) and technically written-off accounts, will be transferred to NARCL,” he added.
Sharma said while continuing its predominant focus on growing structured retail assets, the bank, following its exit from prompt corrective action (PCA) on March 10, 2021, will extend corporate loans, especially to the mid-corporate segment.
Deputy Managing Director, J Samuel Joseph said, since the bank came out of PCA, it has started the process of onboarding corporate clients. “IDBI Bank is examining 80 corporate loan proposals, aggregating an exposure of about ₹8,000 crore,” he added.
CFO, P Sitaram, underscored that the technically written-off accounts and 100 per cent provided GNPA accounts aggregate to ₹76,800 crore. “These accounts will be a source of income to the bank as and when they are recovered, realised and settled,” he said.
In the reporting quarter, net interest margin rose to 4.06 per cent from 2.81 per cent in the year ago quarter.
Fresh slippages were lower at ₹1,332 crore (₹2,382 crore in the fourth quarter of FY21). The increase in existing non-performing assets (NPAs) was at ₹245 crore (₹250 crore).
Gross NPAs edged up to 22.71 per cent of gross advances as at June-end 2021 against 22.37 per cent as at March-end 2021. Net NPA position, however, improved to 1.67 per cent of net advances as at June-end 2021 against 1.97 per cent as at March-end 2021.
The bank made higher provisions towards NPAs (₹199 crore against a write-back of ₹1,120 crore in Q4 FY21) and restructured assets (₹178 crore against ₹9 crore provision). However, provision towards standard assets declined to ₹353 crore (₹708 crore in Q4 FY21).
During the reporting quarter, IDBI Bank made additional provision of ₹447 crore over and above the income recognition and asset classification norms in respect of certain borrower accounts in view of the inherent risk and uncertainty of recovery in these identified accounts.
Deposits nudged up about 1.37 per cent y-o-y to ₹2,22,381 crore. Advances declined about 2.29 per cent y-o-y to ₹1,22,994 crore. The bank said it has made provision of ₹902 crore during the quarter ended June 30, 2021, towards the estimated shortfall in recoveries by stressed assets stabilisation fund trust.