Improving asset quality and better margins helped the crippled IDBI Bank
to marginally narrow its net losses at Rs 3,459 crore in the September quarter, even though the lender chose to make accelerated provisions for stressed assets.
The Life Insurance of Corporation-controlled bank, which has been under the prompt corrective action of the Reserve Bank for more than a year, had reported a net loss of Rs 3,602 crore in the year-ago period.
The management attributed the losses to "accelerated provisions to the tune of Rs 3,425 crore, helping it take the provision coverage ratio to 91.25 from 68.72 from a year ago." Managing director and chief executive Rakesh Sharma told reporters that total provisions during the quarter stood at Rs 4,453 crore. However, the key net interest margin improved by 53 basis points to 2.33 percent during the reporting, massively up from 1.80 percent a year ago.
The gross NPA ratio stood at 29.43, marginally better than 31.78 it had reported in the year-ago period, while the net NPA ratio came down to third at 5.97 from a high 17.30.
Tier 1 capital and CRAR stood at 9.52 percent and 11.98 percent, respectively.
During the quarter, the bank received Rs 4,743 crore from LIC and Rs 4,557 crore from government aggregating to Rs 9,300 crore.
"As on date, we are complying with all the guidelines, which can take us out of the PCA, except for profitability.
Capital adequacy, leverage and net NPA ratio is all complied with. We will now request the regulator to take us out of the PCA," Sharma said.
Fresh slippages stood at Rs 2,059 crore while recoveries and upgrades were to the tune of Rs 1,759 crore.
Sharma said there were no recoveries from NCLT accounts but expects good recoveries from these accounts in the reminder of the fiscal, "which should help us in reducing net NPAs and improving our profitability." The city-headquartered lender had around Rs 6,295 crore of SMA 2 accounts.
Sharma said the bank expects to complete stake sale in IDBI Federal Life by end March, which should also help its bottomline in the coming quarters.
The lender's scrip ended 2.38 percent down at Rs 32.80 on BSE as against an 81 bps plunge in the benchmark Sensex.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.