Retail, treasury buoy IDBI Bank bottomline 39%

Industrial Development Bank of India (IDBI Bank) today reported a 38.7 per cent year on year increase in its net profit in the first quarter of 2006-07, as operating profit from retail banking and treasury operations rose in multiples.

IDBI Bank said operating profit from retail operations in rose 3.6 times to Rs 63.06 crore and operating profit from treasury operations jumped almost 19 times to Rs 19.42 crore during April-June 2006.

Retail and treasury operations not only negated the fall in operating from wholesale banking, but also contributed positively to the growth in profitability of the bank, majority of which is owned by the government.

Operating profit from the wholesale banking was down by 12.31 per cent to Rs 80.21 crore in April-June 2006 from Rs 91.48 crore a year earlier.

Total income in the first quarter was almost flat at Rs 1,668.34 crore compared with Rs 1,600.68 crore, as wholesale banking was a drag. IDBI Bank's income from wholesale banking fell to Rs 1,386.18 crore during April-June 2006 from Rs 1,467.34 crore a year earlier.

A senior IDBI Bank official said the net profit improved in the reporting quarter owing to easing off of pressure to reprice loans (to reduce lending rates), sale of equity investments and reduction in the cost of funds, senior IDBI official said.

The bank reported 22 per cent rise in profit from sale of investments to Rs 148 crore in the quarter ended June 30, 2006 from Rs 121 crore a year earlier.

Its cost of funds dropped 6.61 per cent during the first quarter from 7.14 per cent a year earlier due to greater thrust on mobilising low-cost deposits and repayment of high-cost bonds/deposits.

IDBI Bank's cost of funds is still about two percentage points higher than the banking industry average.

IDBI Bank's deposits rose by about 73 per cent to Rs 29,096 crore from Rs 16,851 crore. The share of low cost deposit in total deposit base now stands at 26 per cent.

Advances were up by 10 per cent to Rs 52,637 crore by end of June 2006 against Rs 47,637 crore a year ago. Retail loans rose by 658 crore to Rs 9,270 crore by the end of the first quarter.

The share of retail advances rose to 18 per cent of total advances from 16 per cent a year ago, IDBI said in statement.