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IDBI Bank Q4 loss narrows to Rs 4,900 crore

Provision for bad loans stood at Rs 8,532 crore, compared with Rs 10,545 crore in the year-ago quarter.

, ET Bureau|
May 30, 2019, 09.11 PM IST
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Mumbai: IDBI Bank, which had a greater share of loan delinquencies than did any other Indian lender, reported a narrower loss in the March quarter on lower net bad loans and maintenance of increased capital buffers.

Net loss in the March quarter was Rs 4,900 crore, compared with a loss of Rs 5,660 crore in the year-ago period. IDBI Bank’s stock closed 2.57% higher at Rs 37.95 on the BSE.

Provision for bad loans stood at Rs 8,532 crore, compared with Rs 10,545 crore in the year-ago quarter. Net NPA, or the percentage of bad loans that haven’t been provided for, declined to 10.11% from 16.7%. The lender said that it intends to bring down net NPA further to 9% by the June quarter and 6% in the three months to December.

Gross NPA ratio in this period reduced marginally by 50 bps to 27.45%, and toxic loans now stand at Rs 50,027 crore, down from Rs 55,588 crore in the March quarter a year ago.

“We have focused on improving our provision coverage ratio (PCR), which is now at 83%. Recoveries of the tune of Rs 13,000 crore are also expected through resolution of stressed assets at IBC courts,” said Rakesh Sharma, chief executive at IDBI Bank.

Earlier this year, the troubled lender saw capital infusion of Rs 21,624 crore after Life Insurance Company (LIC) acquired a 51% controlling stake.

Sharma said that the capital was used to bring liquidity buffers in line with regulatory requirements. While CET 1 ratio improved to 8.91% as against 7.42% last year, Capital Adequacy Ratio (CRAR) rose to 11.58% as against 10.41%. Risk weighted assets also reduced 17% in this period to Rs.1.8 lakh crore.

The lender hasn’t received any formal note yet from the banking regulator on exiting the prompt corrective action (PCA) framework, which imposes operational curbs on banks, especially forbidding big-ticket advances to companies. However, Sharma expressed confidence that the straitjacket would be lifted by the end of this fiscal year.

“We expect to return to profit in the December quarter and be compliant with the PCA norms by the end of the fiscal year,” said Sharma.

Additionally, the bank would look to raise Rs 9,000 crore of capital by selling tier II bonds, and monetizing its investments in the mutual fund subsidiary IDBI Asset Management Company and insurance arm IDBI Federal. The stake sales could raise between Rs 1,500 crore and Rs 2,000 crore.
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