IDBI Bank net profit jumps 46% to Rs 828.09 crore in Sept quarter

Profits would have been higher if not for aggressive provisioning: IDBI Bank CEO

IDBI Bank on Friday reported a 46 per cent year-on-year rise in its July-September net profit to Rs 828.09 crore, with the bottom line being boosted by the lender’s sale of stake in Ageas Federal Life Insurance worth Rs 380 crore last month. This is the lender's highest-ever quarterly profit.

Profit growth was healthy despite the bank making provisions in excess of the regulatory requirements. 

“We have made excess provision of Rs 636 crore during the quarter,” said Rakesh Sharma, managing director & chief executive of IDBI Bank in the post-earnings media interaction. “The profits would have been higher if not for aggressive provisions.” 

The lender’s provision coverage ratio was at 97.86 per cent — highest among commercial banks in the country. 

“We have made aggressive provisioning. We don’t expect any negative surprise going ahead,” Sharma said. 

On a sequential basis, the bank’s net profit grew 9 per cent YoY from Rs 756.36 crore in April-June.

In late September, Ageas Insurance International completed the acquisition of a majority stake in its Indian joint venture Ageas Federal Life Insurance (AFLIC), picking up a 25 per cent stake in IDBI Bank.

The bank’s strong showing in the second quarter was also due to firm growth in net interest income.

In July-September, the bank’s net interest income, or the difference between interest earned and interest expended, jumped 47.7 per cent to Rs 2,738.11 crore. IDBI Bank’s net interest margin clocked in at 4.37 per cent for the quarter under review.

Sharma said the bank expected the margin to remain healthy going ahead. 

Total provisions and contingencies were at Rs 1,380 crore in July-September, up 77 per cent YoY and 7 per cent sequentially. 

The lender’s operating profit was at Rs 2,208 crore in the second quarter, up 64 per cent YoY and 8 per cent sequentially. Other income for the period stood at Rs 1,087 crore, up 11 per cent from a year ago, but down 5 per cent quarter-on-quarter.

As on September 30, IDBI Bank’s deposits were 3 per cent higher from a year ago at Rs 2.3 trillion. Advances stood at Rs 1.5 trillion, up 17 per cent YoY. The bank had guided for 10-12 per cent loan growth in the beginning of the fiscal year.

Within the retail book, the corporate ratio grew to 65:35 in July-September as against 63:37 a year ago. The bank’s current account savings account ratio was at 56.19 per cent as on September 30, up 56.19 per cent YoY.

Asset quality improved with the gross NPA ratio at 16.51 per cent as on September 30, down from 19.90 per cent a quarter ago and 21.85 per cent a year ago. Net NPA ratio was at 1.15 per cent versus 1.25 per cent a quarter ago and 1.71 per cent a year ago. 

Sharma said the process of selling bad loans to NARCL should happen by the end of 2022 as the lender received offers from the asset reconstruction company. Sale of NPAs to the bad bank will reduce IDBI's Bank’s gross NPAs substantially.