A one-time tax hit of Rs 6,273 crore has left IDBI Bank deep into the red for the 13th consecutive quarter with a net loss of Rs 5,763 crore for the three months to December 2019.
The lender, which is now controlled by Life Insurance Corporation (LIC), had reported a net loss of Rs 4,185 crore in the year-ago period. The bank has been under the prompt corrective action (PCA) framework of the Reserve Bank of India since May 2017.
IDBI Bank's Managing Director and Chief Executive Rakesh Sharma on Tuesday said the bank has shifted to the new tax regime due to which it had to take a one-time hit of Rs 6,273 crore on account of deferred tax assets (DTA) reversal.
Under the new tax regime, tax rate is 23 per cent while the old taxation rate is around 34 per cent.
"We opted for lower tax regime. As a result, we have taken a one-time hit of Rs 6,273 crore from DTA. Due to the DTA reversal there is a loss of Rs 5,763 crore in December quarter," Sharma explained.
If this DTA reversal had not happened, the bank's net profit would have been Rs 480 crore, he said.
Net interest margin improved by 39 basis points to 2.27 per cent as compared to 1.88 per cent earlier.
Net interest income improved by 13 per cent to Rs 1,532 crore as against Rs 1,357 crore.
Gross NPA ratio improved to 28.72 per cent as against 29.67 per cent, while net NPA ratio improved to 5.25 per cent from 14.01 per cent. During the quarter, the bank also made an accelerated provision of Rs 1,679 crore which helped it to reduce net NPAs, Sharma said.
Provision coverage ratio improved to 92.41 per cent as on December 31, 2019 from 75.21 per cent in the same quarter last year. Fresh slippages in the quarter stood at Rs 2,113 crore, which was mainly on account of a housing finance company and a manufacturer of irrigation related products.
He also said slippages in the March quarter may not exceed Rs 1,000 crore.
The lender's overall recovery stood at Rs 3,136 crore. It recovered Rs 2,255 crore in the Essar Steel case.
"We expect Rs 2,500 crore of recovery in the fourth quarter. It will also include Rs 1,000 crore to Rs 1,200 crore of sale of NPAs to asset reconstruction companies (ARCs)," he said.
On stake stale in its life insurance subsidiary IDBI Federal Life, Sharma said the deal is in advanced stages of completion. "We have received the binding bids and the evaluation process is currently on. We expect it to be over by June or latest by September of 2020," he said.
The lender's scrip ended 2.07 per cent up at Rs 37 on BSE on Tuesday.
Disclaimer: No Business Standard Journalist was involved in creation of this content
