IDBI Bank Sept net flat at Rs 119.5 cr

Feels heat of rising provisions for bad loans

Despite a healthy rise in net interest income, public sector lender IDBI Bank’s net profit for the quarter ended September remained flat at Rs 119.5 crore on higher provisions for stressed loans.

It had posted a net profit of Rs 118.49 crore in July-September 2014. IDBI stock closed flat at 84.0 on the BSE on Wednesday.

Net interest income, interest income minus interest expenses, for the reporting quarter rose 14.6 per cent to Rs 1,612 crore from Rs 1, 406 crore in the second quarter of 2014-15. With about 50-basis-point fall in cost of funds in one year, the net interest margin improved to 2.06 per cent in Q2 from 1.93 per cent.

Cost of funds dipped to 7.35 per cent from 7.88 per cent. Deposits grew to Rs 2,39,282 crore from Rs 2,38,005 crore a year ago. The yield on assets came down 29 basis points to 9.46 per cent.

Kishor Kharat, managing director and chief executive, said the bank had shed substantial amount of high-cost bulk deposits and increased its share of low-cost ones — current account and savings accounts — to 24.2 per cent from 22.03 per cent a year ago. Both helped improve margins.

The lender’s advances grew by five per cent to Rs 2,04,661 crore from Rs 1,95,057 crore.  The bank expects better growth in credit, especially in retail, agriculture and SME in the third and fourth quarters of the financial year.

Other income, including fees and commissions, rose to Rs 843 crore from Rs 760 crore in the year-ago period.

Gross non-performing assets stood at 6.92 per cent (Rs 14,757 crore) at the end of September 2015 against 5.72 per cent (Rs 11,559 crore) in 2014. Its provisions for bad loan provision and contingencies rose to Rs 1,289 crore from Rs 990 crore in the year-ago period. Its provision coverage was 68.13 per cent.

The capital adequacy ratio was 11.66 per cent with tier-I of 8.04 per cent at the end of September 2015 against 11.71 per cent a year ago in September 2014.