IDBI Bank Q1 results: Net profit rises

 

The private sector IDBI Bank on Wednesday reported a 318 percent YoY rise in net profit at Rs 603.3 crore during the quarter ended June 30, 2021. In the corresponding quarter last year, the bank had posted a net profit of Rs 144.4 crore.

In the first quarter of the current fiscal, its profit before tax (PBT) improved by 134 percent for Q1 2022. It has improved by 18 percent against Rs 512 crore reported a quarter ago.Its operating profit registered a growth of 109 percent YoY as it grew to Rs 2,776 crore.

The bank's net interest income (NII) grew 41.4 percent YoY to Rs 2,506 crore in Q1 FY22. And its net interest margin (NIM) improved by 125 bps to 4.06 percent for the quarter under review, as compared to 2.81 percent YoY.The bank's gross NPA ratio improved to 22.71 percent during the quarter under review, as against 26.81 percent in Q1 FY21. Gross NPA stood at 22.37 percent in Q4 FY21.

The bank's net NPA also improved to 1.67 percent during the quarter under review. While its net NPA was 3.55 percent in Q1 FY21, it was 1.97 percent in Q4 FY21.Its provision coverage ratio, including technical write-offs, improved to 97.42 percent in Q1 FY22 from 94.71 percent in Q1 FY21 and 96.90 percent in Q4 FY21.

The bank's CASA (current account savings account) increased 12 percent to Rs 1,16,609 crore during the quarter under review. As of June 30, 2020, it had reported CASA of Rs 1,04,315 and on March 31, 2021, it was Rs 1,16,491.The share of CASA in total deposits improved to 52.44 percent as of June 30, 2021, against 47.55 percent a year ago and 50.45 percent a quarter ago.

The bank's composition of advances portfolio, corporate versus retail was realigned to 38:62 in the quarter under review, as against 43:57 a year ago.The shareholders' funds of the bank decreased 3 percent QoQ and stood at Rs 1,56,698. crore. Under Basel III, the capital adequacy ratio (CAR) and CET I ratios were 16.23 and 13.64 percent, respectively.

As of June 30, 2021, the bank had COVID-19 provisions worth Rs 863 crore, more than the minimum amount required by the Reserve Bank of India (RBI).

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IDBI Bank disinvestment: Govt approves 100% stake sale by Centre, LIC

The government has approved the sale of its entire stake, and that of the Life Insurance Corporation of India (LIC), in IDBI bank.

On July 9, the Department of Investment and Public Asset Management (DIPAM) said the Cabinet Committee of Economic Affairs (CCEA) has given its go-ahead to the government and the LIC to offload 100 percent of their entire stakes in IDBI Bank, along with a transfer of management.

At present, IDBI Bank is classified as a private sector bank by the RBI with the government's shareholding at 45.5 percent, LIC's shareholding at 49.24 percent and the non-promoter shareholding at 5.29 percent.

However, DIPAM has said that the exact quantum of stake to be sold will be decided based on a number of factors. "It will be determined, as we go through the transaction, and ascertain investor's interest," it said.

The Department has also clarified that since LIC's stake will be sold alongside the government's shareholding in this transaction, there will be only one transaction advisor.

the Centre's plans to offload atleast 26 percent of its stake. It had also reported that the entire stake may be sold.

DIPAM, in the RFPs issued, had said that the bids by interested investment banks, financial institutions, consulting firms and law firms should be submitted by July 13.

Responding to the queries raised by bidders on the RFP, Dipam has said the broad quantum of primary infusion expected in the bank, and the timeframe for such infusion has not yet been decided. It has also clarified that consortium bids are not allowed.

LIC completed the acquisition of controlling stake in IDBI Bank in January 2019 making it the majority shareholder of the bank. Subsequent to the enhancement of equity stake by LIC, the RBI clarified that IDBI Bank stands re-categorised as a private sector bank.

The Cabinet Committee on Economic Affairs had cleared the 'strategic divestment' of IDBI in early May. LIC will reduce its shareholding in IDBI Bank in parallel with the central government, and with an intent to relinquish management control.

For 2021-22, the Centre has set itself a divestment target of Rs 1.75 lakh crore, on the back of the planned privatisation of Air India, Bharat Petroleum, Shipping Corp, Concor, two state-owned banks (yet to be decided) and the initial public offering of LIC Ltd.

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Cabinet approves strategic disinvestment, transfer of management control in IDBI Bank

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has given its in-principle approval for strategic disinvestment along with transfer of management control in IDBI Bank Ltd on Wednesday.

"The extent of respective shareholding to be divested by GoI and LIC shall be decided at the time of structuring of transaction in consultation with Reserve Bank of India," said the government in a statement.

To be sure, LIC Board had earlier approved stake dilution, relinquishing of management control in IDBI Bank.

Government of India (GoI) and LIC together own more than 94% of equity of IDBI Bank (GoI 45.48%, LIC 49.24%). LIC is currently the promoter of IDBI Bank with Management Control and GoI is the co-promoter.

LIC’s Board has passed a resolution to the effect that LIC may reduce its shareholding in IDBI Bank through divesting its stake along with strategic stake sale envisaged by the government with an intent to relinquish management control and by taking into consideration price, market outlook, statutory stipulation and interest of policy holders.

This decision of LIC's Board is also consistent with the regulatory mandate to it to reduce its stake in the Bank.

It is expected that strategic buyer will infuse funds, new technology and best management practices for optimal development of business potential and growth of IDBI Bank Ltd. and shall generate more business without any dependence on LIC and Government assistance/funds.

Resources through strategic disinvestment of Govt. equity from the transaction would be used to finance developmental programmes of the Government benefiting the citizens.

Last month, the RBI removed the LIC-controlled bank from its prompt corrective action (PCA) framework, which was imposed in May 2017, after it had breached certain regulatory thresholds, including capital adequacy, asset quality and profitability.

Presenting the Budget on February 1, Finance Minister Nirmala Sitharaman had proposed to take up the privatisation of two state-run banks along with IDBI Bank in FY22.

Meanwhile, IDBI Bank reported a nearly four-fold jump in its standalone profit after tax to ₹512 crore in the March quarter compared to ₹135 crore in the year-ago period on the back of an impressive 38% growth in its net interest income (NII).

The lender also turned profitable on an annual basis after five years as it reported a standalone profit of ₹1,359 crore for 2020-21 fiscal that ended in March as against a loss of ₹12,887 crore in FY20. On a consolidated basis, the lender reported a net profit of ₹547.93 crore for the January-March quarter as against ₹165.69 crore in the year-ago period.

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IDBI Bank back in black in FY21 after five years

LIC-controlled IDBI Bank turned profitable in the fiscal ended March after five years, posting a net profit of Rs.1,359 crore for the year.

In 2019-20, the lender had posted a net loss of Rs.12,887 crore. IDBI Bank is back in black after five years, said the lender.

In the last quarter of the fiscal year 2020-21, the bank reported an almost fourfold jump in its net profit to Rs.512 crore, IDBI Bank said in a press release

The bank, which came out of the RBI’s prompt corrective action (PCA) framework earlier in March, said its turnaround strategies led to the transformation.

Total income during Q4FY21 rose to Rs.6,969.6 crore from Rs.6,924.9 crore in the same period of 2019-20.

The full year income, however, was down to Rs.24,557 crore against Rs.25,295 crore.

Gross NPA (non-performing asset) ratio improved to 22.4% as on March 31 against 27.5%. Net NPA ratio improved to 1.9% from 4.2%

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IDBI Bank Q3 results: Net profit up

IDBI Bank on Thursday reported a standalone net profit of Rs 378 crore for December quarter of the current fiscal year as bad loans shrank.

The bank had posted a net loss of Rs 5,763 crore for the year-ago period.

Total income, however, fell during the quarter under review at Rs 5,932.25 crore as against Rs 6,215.60 crore in the same period of 2019-20 as interest income came down.

Interest income of the lender was down at Rs 4,563.98 crore during the quarter as against Rs 4,937.24 crore in the year-ago period, the bank said in a regulatory filing.

However, the net interest income grew 18 per cent to Rs 1,810 crore.

Net Interest Margin (NIM) improved by 60 basis points to 2.87 per cent in the third quarter as compared to 2.27 per cent in the same period a year ago, IDBI Bank said in a release.

The bank's asset quality improved as gross non-performing assets (NPAs) or bad loans reduced to 23.52 per cent of the gross advances as of December 31, 2020 as against 28.72 per cent by the same period a year ago and 25.08 per cent by the end of September 2020.

Net NPAs decreased to 1.94 per cent from 5.25 per cent.

In value terms, gross NPAs were worth Rs 37,559.39 crore at December-end 2020 as against Rs 49,502.68 crore by the end of same month a year ago. Net NPAs were valued at Rs 2,410.90 crore, lower than Rs 6,805.49 crore.

However, the overall provisions for bad loans and contingencies were kept higher at Rs 796.31 crore for December quarter 2020-21 as against Rs 521.95 crore kept aside for the year-ago period.

But out of this, the provisions for bad loans were substantially lower at Rs 48.52 crore as against Rs 440 crore a year ago.

Provision Coverage Ratio (including technical write-offs) improved to 97.08 per cent as on December 31, 2020 from 92.41 per cent a year ago and 95.96 per cent by the end of September 2020.

IDBI Bank said it raised equity capital of Rs 1,435.18 crore during the quarter through QIP.

The tier 1 capital improved to 12.22 per cent from 10.16 per cent and CRAR (capital to risk weighted assets ratio) improved to 14.77 per cent from 12.56 per cent, it added.

Among others, during the quarter ended December 2020, the bank has sold 23 per cent stake out of 48 per cent holding in its joint venture IDBI Federal Life Insurance Company (now Ageas Federal Life Insurance Company Ltd).

The post-sale holding in the joint venture is 25 per cent as on December 31, 2020, the bank said.

Further, in accordance with the RBI guidelines relating to COVID-19, the bank has cumulative COVID-19 related provision of Rs 436 crore as on December 31, 2020.

The provision made by the bank is more than minimum required as per the RBI guidelines, it said.

The bank has made provision of Rs 70 crore during the quarter (Rs 270 crore as on September 30, 2020 has been continued), towards the provisioning requirement for cases to be restructured under the resolution framework.

The cumulative provision is Rs 340 crore as on December 31, 2020, said the lender.

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IDBI Bank likely to exit PCA list; bank claims fulfills all criteria

The Reserve Bank of India (RBI) may soon bring IDBI Bank out of the Prompt Corrective Action (PCA) list. According to the Zee Business exclusive report, IDBI Bank has recently written a letter to RBI and claimed it fulfills all criteria required to come out of the PCA list. The bank has been in this list since May 2017.

Zee Business reporter Anurag Shah said, "IDBI Bank has recently written a letter to the RBI and claimed it fulfills all criteria required to come out of the PCA list." Shah added that IDBI has reported profitability in last two consecutive quarters of Rs 135 crore and Rs 144 crore. Apart from this, its Provisioning Coverage Ratio (PCR) is to the tune of 94 per cent, which is highest among all Indian banks. IDBI's Capital Adequacy Ratio (CAR) is more than 13 per cent. 

Shah said that since bank is fulfilling all criteria to come out of the PCA list, RBI may soon delist it from there.

Reporting about the liquidity status of the IDBI Bank, Anurag Shah said, "IDBI Bank has got approval to sell 27 per cent stake in its insurance arm, IDBI Federal Insurance. Now, it can sell 23 per cent of the IDBI Federal stake to its strong promoter Aegis, while the rest 4 per cent to Federal Bank. This stake sale will also lead to more liquidity in the bank in coming times and that will definitely bring its CAR further down from existing 13 per cent."

On the benefits to be derived when and if RBI releases IDBI Bank from PCA list, Shah told Zee Business Managing Editor Anil Singhvi, "Once RBI brings IDBI Bank out of the PCA list, it will be able to do corporate lending from which it has been barred since May 2017. Apart from this, it will be useful for the government as well because it has already announced that it will sell its entire stake in the bank. If the bank comes out of the PCA list, they will get better valuations of their share."

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Govt may sell stake in IDBI Bank in FY21 but no decision yet on other banks

The government intends to go ahead with its proposed stake sale in IDBI Bank in the current fiscal and there is no decision as yet on privatising more banks, a finance ministry source said on Saturday.

The statement comes amid growing speculations about the government privatising more banks, including Uco Bank, Punjab & Sind Bank and Bank of Maharashtra, following reported recommendations by Niti Aayog.

The central bank also reportedly made a pitch for the government to pare down its stake in certain state-run banks to 26%.

The government held a 47.11% stake in IDBI Bank as of June 2020, while LIC is the promoter of the bad loan-laden lender with a 51% stake. The Centre has set a disinvestment target of Rs 2.1 lakh crore for the current fiscal. Of this, Rs 1.2 lakh crore will come from divestment of public sector undertakings.

The rest Rs 90,000 crore is expected to come from stake sale in financial institutions like LIC and IDBI Bank.

The centre will also come out with a list of strategic sectors soon. If banks feature in that, there could be scope for further amalgation or privatisation of state-run banks. “However, it will all depend on which sectors are finally part of the strategic sector list. The Cabinet will soon take a call on this issue,” said the source. Similarly, no final decision has been made yet on the quantum of the government’s stake dilution in insurance behemoth LIC, added the source.

Once a sector is declared strategic, a maximum of four state-run companies will be allowed in it, the government recently announced. Already, thanks to a series of amalgamations in recent years to create a few lenders with much stronger balance sheets, the number of state-run banks has been reduced from 27 in 2017 to just 12 now.

Despite the enormous challenges posed by the Covid-19 outbreak, the government is working on completing the stake sale process of about 23 public sector companies, divestment in which has already been cleared by the Cabinet, finance minister Nirmala Sitharaman said earlier this week.

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IDBI Bank posts net profit in Q4

IDBI Bank on Saturday posted a net profit of Rs 135 crore for the quarter ended March 2020 on account of recoveries from bad loans. The lender reported a profit after 13 straight quarters of net losses.

The bank, majority owned by Life Insurance Corporation of India (LIC), had posted a net loss of Rs 4,918 crore in the corresponding period of last year.

Total income rose to Rs 6,925 crore as against Rs 6,616 in the fourth quarter of 2018-19, the bank said in a regulatory filing.

As a result of increased recovery from resolution of bad loans, there was write back of Rs 1,511 crore as against provision of Rs 7,233 crore in the same period last year.

The bank made COVID-19-related provisions of Rs 247 crore during the quarter against standard assets.

The gross non-performing assets ratio inched up to 27.53 percent during the quarter as against 27.47 percent, while net NPA came down sharply to 4.19 percent as against 10.11 percent earlier.

The bank raised Rs 745 crore through issue of Basel-III compliant tier-2 bonds in the March quarter. The amount mobilised would be counted as part of tier-2 capital and enhance the capital adequacy of the bank, it said.

Despite posting a profit in the fourth quarter, IDBI Bank logged a net loss of Rs 12,887 crore for 2019-20 as against a net loss of Rs 15,116 crore in FY19.

The net interest margin (NIM) for FY20 improved to 2.61 percent as against 2.03 percent in the previous fiscal.

In January 2019, LIC completed the acquisition of 51 percent controlling stake in the lender. The state-run life insurer infused Rs 21,624 crore into the bank.

The bank, which is under the Reserve Bank of India's prompt corrective action (PCA) framework, said it has achieved all PCA parameters for exit except return on asset.

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