IDBI Bank Loss widens to Rs 56.6 billion as NPAs touch 28%

Widens to Rs 56.6 bn, with gross NPA 28%, second highest ever in sector; banks says worst behind it

Government-owned IDBI Bank's net loss widened to Rs 56.6 billion in the March quarter, on a sizable Rs 107.8 bn provision for bad loans.

The quarterly loss, the sixth in a row, was deeper than the Rs 31.9 bn in the same period last year. For the full year ended March 2018, the net loss is Rs 82.4 bn, against one of Rs 51.6 bn in 2016-17.

However, operating profit for the quarter (fourth or Q4 of 2017-18) more than doubled to Rs 23.6 bn, from Rs 10.4 bn in Q4 of 2016-17.

Its gross non-performing assets (NPAs) stood at 27.95 per cent of total advances. The latter proportion is second highest in the history of Indian banking, next only to its own GNPA of 30 per cent in the quarter ended December 2003. In fact, that gross NPA figure is far lower than the Reserve Bank's (RBI's) calculation, of Rs 550.3 bn, as against the bank's assessment of Rs 447.5 bn.

Top 10 gross NPA declared by banks (%)

IDBI is already under RBI's 'prompt corrective action' framework. Its provisioning for NPAs rose to Rs 107.7 bn, from Rs 60.5 bn in the same quarter of 2016-17.

The stock closed three per cent less on Friday at Rs 65 on the BSE.

M K Jain, managing director and chief executive, said asset slippage (loans turning to NPAs) in Q4 was high as the bank had to reclassify some restructured advances as NPAs, in line with RBI's new rules. Much of the legacy issues were addressed in 2017-18 and the focus for this financial year was on recoveries, the bank said.

Slippage in Q4 amounted to Rs 50 bn over that in the earlier quarter. As part of cleaning its balance sheet, the bank plans to put NPAs worth Rs 210 bn on sale. Some of these accounts are from RBI's first list of firms taken to the National Company Law Tribunal. The bank would only part with these stressed loans if it gets the expected value, Jain said.

Net NPAs were 16.7 per cent (Rs 286.65 bn) of advances, up from 16 per cent (Rs 293.5 bn) in December 2017 and 13.2 per cent (Rs 252 bn) at the end of March 2017. The bank engaged in sale of non-core assets, including in realty and stake in the National Stock Exchange and SIDBI in 2017-18. Profit from this was Rs 38.7 bn.

The plan is to sell 26-30 per cent stake in its mutual fund subsidiary, IDBI Asset Management Company, to a strategic investor. IDBI Capital Market Ltd, its investment banking arm, will reduce its stake in the AMC from the current 33 per cent. The other 67 per cent is held by the bank. It also hopes to conclude sale of a 30 per cent stake in NSDL, valued around Rs 9 bn.

The capital adequacy ratio was 10.41 per cent (common equity of 7.42 per cent) at end-March.