IDBI Bank loss narrows to Rs.4918 Cr

IDBI Bank recorded its 10th consecutive quarterly loss in the March 2019 quarter, though the top management said it would earn profits in the 3rd quarter on the back of huge recoveries and monetization of non-core assets.

PCA FRAMEWORK

The bank expects to come out of restrictive prompt corrective action (PCA) framework by 3rd or 4th quarter of the current financial year.
The bank, in which Life Insurance Corporation of India holds 51 percent stake, reported a net loss of Rs.4,918Crore, against a net loss of Rs.5,663Crore earlier.
Loan-loss provisions jumped to Rs.7,233Crore in the reporting quarter, against Rs.5,075Crore in the preceding quarter. Net interest income rose 76 percent year-on-year (y-o-y) to Rs.1,609Crore in the reporting quarter, against Rs.915Crore in the year-ago period. Other income was down 57 percent y-o-y to Rs.1,153Crore (?2,701Crore in the year-ago quarter).
Rakesh Sharma, Managing Director, said IDBI Bank would get down its net non-performing assets (NNPAs) to below 9 percent of net advances in the June 2019 quarter and under 6 percent in the September 2019 quarter.
NNPAs declined to 10.11 percent in the March 2019 quarter, against 16.69 percent in the year-ago quarter. Provision coverage ratio gets better by 82.88 percent from 63.40 percent.
Sharma said the bank had set a recovery target of Rs.13,000 crore, including from the large stressed accounts referred to the National Company Law Tribunal, in FY2020.
The bank is expecting to rise to Rs.7,000 crore via qualified institutional placement; Rs.2,500-3,000 crore via Tier-II bonds and Rs.1,500-2,000 crore via sale of non-core assets.
Gurudeo M Yadwadkar, Deputy Managing Director, said the bank would complete the sale of its 66.67 percent stake in IDBI Asset Management Company in the next couple of quarters.
Further, the bank has re-started the process of selling, either partly or fully, its 48 percent stake in IDBI Federal Life Insurance Company.
During the quarter, two accounts, aggregating Rs.1,781 crore slipped for the first time.