IDBI Q1 net up 27% at Rs 135 crore

While income profile improves, asset quality stays weak

IDBI Bank’s net profit for the first quarter ended June rose 27 per cent to Rs 135 crore on a substantial rise in net interest income (NII) — the difference between interest earned and expended — and other income comprising fees, commissions and treasury earnings.

The public sector lender had posted a net profit Rs 106 crore in April-June 2014.

Despite better growth in topline, IDBI Bank’s shares were down four per cent at Rs 62.30 apiece on the BSE on Wednesday.

The bank’s NII rose 20 per cent to Rs 1,495 crore in the first quarter of FY16 from Rs 1,250 crore in the year-ago quarter. The net interest margin (NIM) — the difference between interest paid and interest received — rose to 1.83 per cent in the quarter under review from 1.70 per cent a year ago, said N S Venkatesh, executive director and chief financial officer, IDBI Bank.

According to Venkatesh, among the factors that helped post better growth in interest income are increase in retail loans that fetch higher margins than corporate loans, and enhanced earning on deposits with the Rural Infrastructure Debt Fund.

Credit stood at Rs 2,04,339 crore during the quarter under review, an 11 per cent increase from Rs 1,84,581 crore a year ago. Its deposits increased 15 per cent to Rs 2,41,328 crore from Rs 2,10,343 crore. Credit is expected to grow at 12-15 per cent and deposits at 14-15 per cent in FY16, said Venkatesh.

Other income rose 28 per cent to Rs 642 crore, against  Rs 500 crore in April-June 2014.

While its income profile improved, asset quality continued stay under pressure. The gross non-performing assets (GNPAs) rose to 6.64 per cent (Rs 14,112 crore) in June from 5.64 per cent (Rs 10,763 crore) in the year-ago period. GNPAs had stood at 5.88 per cent (Rs 12,684 crore) in March 2015.

Venkatesh said slippages were concentrated in infrastructure and the mid-corporate segment. According to him, asset quality pressures would abate in two-three quarters with the economy improving.

Its provisions and contingencies rose to Rs 878 crore, from Rs 776 crore a year ago. The provision coverage ratio improved to 66.4 per cent in June, from 63.8 per cent a year ago.

The capital adequacy ratio under Basel-III was 11.74 per cent with Tier-I of 8.13 per cent in June 2015 against 11.78 per cent with Tier-I of 7.86 per cent in June 2014.