IDBI Bank Q2 profit falls 39% on high base, underlying earnings rise 14%

IDBI Bank reported a 39 per cent year-on-year decline in net profit to Rs 2,205 crore for the July-September quarter of FY27, largely due to a one-time gain recorded last year, while its underlying profit grew 14 per cent amid stronger interest income and improving asset quality.

IDBI Bank reported a 39 per cent year-on-year decline in net profit to Rs 2,205 crore for the July-September quarter of FY27, largely due to a one-time gain recorded last year, while its underlying profit grew 14 per cent amid stronger interest income and improving asset quality. According to the bank's earnings release, net profit stood at Rs 3,627 crore in the corresponding quarter last year, which included a one-time gain of Rs 1,699 crore from the sale of its strategic investment in National Securities Depository Limited (NSDL).

The bank stated, "Excluding this one-off gain, YoY increase in Operating Profit and Net profit is 59% and 14% for Q2 FY27 respectively." Operating profit stood at Rs 2,893 crore, compared with Rs 3,523 crore a year earlier. Excluding the exceptional gain, operating profit increased 59 per cent to Rs 1,824 crore.

The bank's core lending income also strengthened, with net interest income rising 29 per cent year-on-year to Rs 4,228 crore from Rs 3,285 crore. Net interest margin improved to 4.11 per cent from 3.71 per cent a year earlier, while the cost of deposits declined to 4.55 per cent.

Asset quality also improved, with gross non-performing assets (NPAs) declining to 2.12 per cent from 2.65 per cent a year earlier, while net NPAs fell to 0.17 per cent from 0.21 per cent. The bank stated, "The PCR is consistently above 99% since September 2023." Its provision coverage ratio, including technical write-offs, stood at 99.24 per cent.

Total deposits grew 17 per cent year-on-year to Rs 3.56 lakh crore, while net advances increased 18 per cent to Rs 2.72 lakh crore. The results come amid the ongoing strategic disinvestment process in IDBI Bank, with the Finance Ministry issuing a clarification on Saturday concerning legislative developments related to the government's shareholding in the lender.

The latest earnings indicate stronger core banking performance and improving asset quality, despite the sharp decline in reported profit caused by last year's exceptional gain. (ANI)