IDBI Bank Q1 net falls 65% on stagnant interest income

To raise upto Rs 5,500 crore via tier I capital bonds

Hit by stagnant interest income, public sector lender IDBI Bank’s net profit dropped sharply by 65 per cent to Rs 106 crore for the first quarter ended June 30. The Mumbai-based commercial bank had posted a net profit of Rs 307 crore in April-June 2013.

The stock was down by seven per cent at Rs 85 a share at close of trading on BSE.

The net interest income declined to Rs 1,251 crore from Rs 1,475 crore in Q1 of FY14. The net interest margin (NIM) also declined to 1.7 per cent from 2.1 per cent in Q1 of FY14.

P Sitaraman, executive director and chief financial officer, said the interest income remained stagnant partly due to larger dues under the rural infrastructure development fund and priority sector lending-linked deposits.

Non-interest income fell to Rs 500 crore from Rs 717 crore. “Profit from sale of investments was lower. Also, the fee income was down, reflecting subdued business environment,” the CFO said.

Deposits increased 15 per cent to Rs 2,10,343 crore as at the end of June from Rs 1,83,277 crore as at June 2013 end.

Advances grew marginally by three per cent to Rs 1,84,581 crore in June from Rs 1,78,945 crore in the corresponding period of 2013.

Non-performing assets (NPAs) grew to 5.64 per cent from 4.34 per cent a year ago. Gross NPAs rose about Rs 800 crore, but this is lower compared to slippages in excess of Rs 1,000 crore each quarter earlier, Sitaraman said.

Meanwhile, its board gave a nod to raise up to Rs 1,000 crore through long-term bonds for financing of infrastructure and affordable housing.

For enhancing tier-I capital adequacy bank will also raise up to Rs 5,500 crore through Basel III compliant additional tier-I bonds in tranches. Bonds could be issued in rupee and foreign currencies; bank informed BSE.

The Capital Adequacy ratio (CAR) stood at 11.78 per cent (as per Basel-III) as of June 30 as against 12.58 per cent a year ago.