Reduction in interest and operating expenses coupled with a jump in other income helped IDBI Bank reduce net loss by 32 per cent to ₹1,524 crore in the third quarter ended December 31, 2017, against ₹2,255 crore in the year-ago period. The public sector bank said it expects to be back in black in the next three-four quarters.

Provisioning for non-performing assets (NPAs) rose to ₹3,650 crore in the reporting quarter against ₹3,136 crore in the year-ago quarter. Gross NPAs as a percentage of gross advances stood at 24.72 per cent, against 24.98 per cent in the preceding quarter.

Net loss in the reporting quarter was, however, much higher than the preceding quarter’s net loss of ₹198 crore as other income at ₹849 crore was much lower than the ₹2,293 crore (which was on the back of 10.03 per cent stake-sale in SIDBI and 2.50 per cent stake sale in CCIL) in the preceding quarter. In the reporting quarter, the bank sold 4.89 per cent stake in SIDBI for ₹642 crore.

Net interest income (the difference between interest earned and interest expended) was up 105 per cent year-on-year (y-o-y) ₹1,666 crore (₹813 crore in the year-ago quarter). Other income was up 44 per cent y-o-y at ₹849 crore (₹588 crore).

The bank has initiated measures such as selling non-core assets (it has put IDBI Federal Life Insurance Company on the block), reducing bulk deposits, rationalising branches (which are making losses for five years or more) and ATMs (which have low footfalls), recovery from/upgradation in assets, and stepping up retail lending, said Krishna Prasad Nair, Deputy Managing Director.

As at December-end 2017, deposits of the bank, which was put on prompt corrective action (PCA) in May 2017 in view of high NPAs and negative return on assets, shrunk to ₹2,36,978 crore (from ₹2,98,194 crore as at December-end 2016).

Advances too declined to ₹1,83,271 crore from ₹2,18,664 crore. Nair said it is a conscious decision to shrink the balance sheet.

Expecting the bank to be in the black in the next three-four quarters, Gurudeo Yadwadkar, Deputy Managing Director, emphasised that the bank’s net interest income was up 105 per cent and operating profit showed a substantial jump (rising to ₹1,420 crore against ₹182 crore in the year-ago quarter).

Yadwadkar said the sale of IDBI Federal Life, the embedded value of which is around ₹1,700 crore, is expected to materialise next quarter.

Ajay Sharma, Chief Financial Officer, said the loan mix between retail:wholesale improved to 43:57 from 36:64 in the year-ago period. This mix is expected to improve to 50:50 in the next two-three quarters.