IDBI Bank net up fourfold on recovery of Kingfisher dues, higher other income

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IDBI Bank, a private lender, reported a 318% increase in net profit (y-o-y) to Rs 603 crore for the quarter ended June 2021 due to other income and withdrawals from Kingfisher Airlines accounts. Despite an 84 percent increase in provisioning, the lender reported a strong base of Rs 2,173 crore.

On the back of 41 percent growth in net interest income (NII), its operating profit rose 109 percent to Rs 2,776 crore. 2,506 crore. The total recovery from Kingfisher Airlines during the quarter was Rs 733 crore, of which Rs 455 crore was reflected in NII and the other amount of Rs 278 crore was shown by the lender on other income factors.

Other income increased by 63% year-on-year and quarterly (QoQ) by 39% quarterly to Rs 1,639 crore, including commission exchange and brokerage, Rs 404 crore, and treasury revenue of Rs 690 crore. The lender’s net interest margin (NIM) increased by 125 basis points (bps) to 4.06% but declined by 108 bps.

IDBI Bank MD and CEO Rakesh Sharma said, “The bank’s capital and liquidity are strong and will continue to be the focus area. Credit growth is expected to be 8-10 percent by the end of March 2022.

Asset quality remained a mixed bag in the June quarter. The NPA ratio of lenders increased by 34 basis points to 22.71 percent. Total NPAs stood at 22.37 percent in the previous quarter. However, the NPA ratio rose by 30 basis points to 1.67 percent. It was 1.97 percent in the March quarter. We expect GNPAs to fall below 15 percent as loans are transferred to the National Asset Reconstruction Company (NRCL) and credit growth is expected.

Recovery from technically written accounts rose to Rs 331 crore in the June quarter. 117 crore in the second quarter and `269 crore in Q4FY21.

The provident coverage ratio (PCR) increased by 271 basis points to 97.42 percent in June 2021, strengthening the lender’s balance sheet. Investment costs fell 93 basis points to 3.72%, while funds fell 98 basis points to 3.98%. Net income ratio declined by 1923 basis points to 33.02 percent in the June quarter.

Advance 6% YOY and 3% QoQ fell to Rs 1.56 lakh crore. However, the retail corporate ratio in the overall uptrend increased from 57:43 to 62:38 until June 2020. The lender is from the Reserve Bank of India’s quick fixing framework and the bank aims to grow its base in corporate credit. “We will try to engage with corporates in a carefree and calibrated manner,”

Investment rose by one percent to Rs 2.2 lakh crore but fell by 3 percent. The share of current account savings account (CASA) in total deposits increased by 489 basis points to 52.44% YOY from 47.55 in June 2020.

The bank collected a premium of Rs 32 crore for LIC and collected a fee of Rs 5 crore. The Capital Adequacy Ratio (CAR) was 16.23% in the June quarter and 13.37% on June 30, 2020

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