IDBI Bank reports net profit of Rs 144 cr for June quarter

LIC-owned IDBI Bank on Tuesday reported a standalone profit after tax of Rs 144 crore for the quarter ended June, helped by lower provisioning and higher interest income. The bank's tier-1 capital ratio improved to 10.59 per cent as on June 30, 2020, from 6.14 per cent in the corresponding quarter of 2019-20.

LIC-owned IDBI Bank on Tuesday reported a standalone profit after tax of Rs 144 crore for the quarter ended June, helped by lower provisioning and higher interest income. The lender, which is under the Reserve Bank of India's prompt corrective action (PCA) framework since May 2017, had reported a net loss of Rs 3,801 crore in the corresponding period of the previous fiscal. This is the second successive quarter when the bank has reported net profit, after being in red for 13 consecutive quarters. In the last quarter of 2019-20, it had posted a profit after tax of Rs 135 crore. "Our operating profit has shown improvement of 39 per cent and NII (net interest income) has also risen by 22 per cent. Another major factor is that our net NPAs declined to 3.55 per cent," the bank's Managing Director and CEO Rakesh Sharma told reporters. During the quarter, there was a reversal of Rs 1,335 crore on provisions for non-performing loans which also aided the profit. Total provisions dropped to Rs 1,182 crore from Rs 4,752 crore in the year-ago period. In the reporting quarter, the lender made further COVID-19 related provisions of Rs 189 crore, taking the cumulative provisions to Rs 436 crore. Nearly 56 per cent (by value terms) of the bank's total book is under moratorium, Sharma said. In the large and mid-corporate group, close to 61 per cent have availed the moratorium while in the retail segment, around 55 per cent of borrowers by value have availed the moratorium. NII grew 22 per cent to Rs 1,773 crore as against Rs 1,458 crore in the year-ago period. Net interest margin also improved by 68 basis points to 2.81 per cent as compared to 2.13 per cent. Gross NPA ratio improved to 26.81 per cent as against 29.12 per cent. Net NPA ratio stood at 3.55 per cent as against 8.02 per cent earlier. Provision coverage ratio (including technical write-offs) stood at 94.71 per cent as on June 30, 2020. Fresh NPAs reduced to Rs 69 crore in the three months to June. Total recoveries in the reporting quarter were Rs 520 crore. "Going forward, our target will be to make recoveries of more than Rs 1,000 crore every quarter," Sharma said. The bank will now write to RBI for lifting of PCA, he said. "Our (financial) position has been improving quarter-on-quarter from the last one-and-a-half year. Today we have declared the results and we will now write to RBI in a day or so (for lifting of PCA)," he added. The bank's tier-1 capital ratio improved to 10.59 per cent as on June 30, 2020, from 6.14 per cent in the corresponding quarter of 2019-20. Capital to risk assets ratio (CRAR) improved to 13.37 per cent as against 8.14 per cent last year same period. Sharma also said the bank has finalised the deal to sell stake in IDBI Mutual Fund and is awaiting the regulator's approval. It also expects to close the deal to sell its stake in IDBI Federal Life Insurance by end-December. The bank's scrip ended at Rs 38.25 apiece, up 3.66 per cent on BSE.