IDBI Bank net slips 28%

The bank earns Rs 307 cr in the first quarter as against Rs 427 cr recorded in same period a year ago

IDBI Bank on Thursday posted a 28 per cent drop in its net profit at Rs 307 crore for the first quarter ended June 30, against Rs 427 crore in the corresponding period of the previous year. The sharp decline came on account of higher provisioning for bad loans by the bank during the quarter.

“The profit is down because of higher provisioning for non-performing assets (NPAs). We have to provide further for freshly slipped NPAs,” said its newly-appointed chairman & managing director M S Raghavan. He, however, added incremental provisioning would come down drastically in the coming quarters and the bank would be able to maintain its profitability this year.

Net NPAs of the state-run lender rose to 2.2 per cent of the total advances in April-June 2013-14, compared with 2.1 per cent in the corresponding period of 2012-13. Gross NPAs were 4.3 per cent of advances, against 3.2 per cent in the same quarter of the previous financial year.

Provisions (other than tax) and contingencies increased from Rs 509 crore at the end of June last year to Rs 829 crore this year. Total income of the state-bank rose to Rs 7,445 crore in the April-June quarter from Rs 6,789 crore in the same period last year. Net interest income grew by 16 per cent to Rs 1,475 crore.

Advances of the bank increased by seven per cent to Rs 1,78,945 crore at June-end, against 1,67,138 crore in the year-ago period.

The bank is expecting a growth of 12 per cent in credit as well as deposits this year.

The bank’s Capital Adequacy Ratio as of June 30 stood at 12.6 per cent as per Basel -III requirements.

Raghavan said the bank plans to raise funds to the tune of Rs 3,000 crore this year. While some part of it was expected to come from the government in form of capital infusion, the shortfall would be met by tapping the markets, he added.