IDBI Bank gains 5%, hits 52-week high on plan to sell stake in insurance JV

IDBI Bank has 48 per cent stake in IDBI Federal Life Insurance, which started operations in 2008. Federal Bank and its Dutch partner Ageas Insurance International NV have 26 per cent stake, each.

“The board of directors, at its meeting held on Friday, June 26, 2020, has approved to sell IDBI Bank’s stake in IDBI Federal Life Insurance Company to the extent of 23 per cent to Ageas and 4 per cent to Federal Bank at a combined value of about Rs 595 crore,” IDBI Bank said in a regulatory filing.

The stake sale is subject to all regulatory approvals to be taken by all related parties and agreements which are yet to be finalised, it said.

The stock was trading at its fresh 52-week high, after surpassing its previous high of Rs 40.90 touched on November 25, 2019. Till 09:29 am, a combined around 29 million equity shares had changed hands and there were pending buy orders for 1.9 million shares on the NSE and BSE. In comparison, the S&P BSE was down 0.86 per cent at 34,870 levels.

In the last one month, the stock has zoomed 106 per cent from the level of Rs 20.30, against 7.5 per cent rise in the benchmark index in the same period. The bank had reported profit in the March quarter of FY20 (Q4FY20) after reporting losses for 13 straight quarters.

The lender posted a profit before tax (PBT) of Rs 289.66 crore for the fourth quarter ended March 2020 on a healthy rise in net interest income and a sharp drop in provisions and contingencies. The bank had posted a loss before tax of Rs 7,136 90 crore in quarter ended March 2019 (Q4FY19).

The asset quality of bank, which is under Prompt Corrective Action (PCA), showed an improvement in slippage during the fourth quarter. The gross non-performing Assets (GNPAs) stood at 27.53 per cent in Q4FY20 as against 27.47 per cent in Q4FY19. While the gross NPAs stood at 28.72 per cent at end of December 2019 (Q3FY20), net NPAs declined to 4.19 per cent in March 2020 from 10.11 per cent in March 2019.