IDBI Bank Q1 loss widens to Rs 3,801 cr on higher provisions

Life Insurance of Corporation of India (LIC)-owned IDBI Bank net losses widen to Rs 3,801 crore in the quarter ended June on higher provision for NPAs. The bank had reported a net loss of Rs 2,410 crore in the same quarter of the last year.

"As we had to make higher provisions for NPA there was a net loss of Rs 3,801 crore during the quarter," its managing director and chief executive Rakesh Sharma told reporters. Its provision for NPAs stood at Rs 7,009 crore as against Rs 4,603 crore in the year-ago period.

"There were two accounts worth over Rs 2,000 crore from the power sector-owned by Navratna company that RBI had asked us to downgrade and because of that some additional Rs 1,200 crore of provision we had to make. We are quite sure that these two accounts will be upgraded within a year or so," Sharma said. Total provision stood at Rs 4,752 crore as against Rs 3,491 crore.

Net interest margin were at 2.13 per cent as against 2.17 per cent. Gross NPA ratio improved to 29.12 per cent as against 30.78 per cent, while net NPA ratio improved to 8.02 per cent from 18.76 per cent as on June 30, 2018.

It expects to bring net NPA to below 6 per cent by September quarter. The bank's recovery from NPAs stood at Rs 729 crore.

Fresh slippages were at Rs 3,486 crore, it said. "Except these two accounts where slippages had to be downgrade, the slippages were well within the limit which we had prescribed," Sharma said adding the bank has set a recovery target of Rs 12,000-13,000 crore in FY20.

It is also planning to raise Rs 3,000-3,500 crore of NPAs to asset reconstruction companies during the year. He said the bank is likely to be in black in the third or fourth quarter of this fiscal. It also expects to be out of the Reserve Bank of India (RBI's) prompt corrective action (PCA) by December quarter.

In January 2019, LIC completed acquisition of 51 per cent controlling stake in the bank. The state-run life insurer infused Rs 21,624 crore into the bank. Sharma said the bank is looking to raise Rs 10,500 crore capital, including Rs 9,000-9,500 crore from private placement and Rs 1,500 crore from stake sale in IDBI Federal Life Insurance and IDBI Mutual Fund.

The lender's scrip ended at 1.31 per cent to Rs 27.15 apiece on BSE on Wednesday..

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)