IDBI Q3 net profit up 39% to Rs 176 crore

Industrial Development Bank of India (IDBI Bank) has posted 38.7 per cent rise in net profit at Rs 175.8 crore in the third quarter ended December 2007 over Rs 126.79 crore a year ago, due to robust growth in commissions, fee-based income and sale of equity.

The interest income in the quarter was Rs 2,077.2 crore compared with Rs 1,697.3 crore in October-December 2006. The interest expenses rose from Rs 1,485.4 crore to Rs 1,864.3 crore. Thus its net interest income (NII) was flat in the reporting quarter.

The bank's other income comprising items such as commissions and fees more than doubled to Rs 394.15 crore in the third quarter of 2007-08 from Rs 180.30 crore a year ago. This helped to improve profits, according to the chairman and managing director Yogesh Agarwal.

The chief financial officer, R K Bansal said that the bank has also benefited from sale of shares in upbeat stock market conditions. The gain from the sale of equity is close to Rs 260 crore.

The bank has reorganised itself and become operationally flexible by scrapping certain strategic business units. It is now focussing on value and quality in services, Agarwal added.

The public sector bank recorded a 27.82 per cent increase in its business at Rs 1,25,332 crore at the end of December 2007 as against Rs 98,057 crore a year ago. The deposits increased by 51.34 per cent to Rs 56,889 crore. The cost of funds went up to 8.07 per cent from 7.19 per cent a year ago.

The outstanding credit rose by 13.19 per cent to Rs 68,443 crore. Assets rose by 15.78 per cent to Rs 1,13,182 crore from Rs 97,754 crore at the end of December 2006. The yield on assets was 9.33 per cent (7.99 per cent).

The bank has released Rs 236 crore out of the total provision of Rs 286 crore made for non-realizable loans and advances of United Western Bank (now merged with bank), Bansal said.

This sum has been provided for receivable against investments in state finance institutions and refinance extended to them. The outstanding from these institutions is close to Rs 478 crore, Bansal added.

IDBI's capital adequacy ratio (CAR) stood at 13.31 per cent (tier I - 8.57 per cent) against 9 per cent stipulated by the RBI. This provides significant headroom for further growth.