IDBI Bank posts loss of ₹1,736 cr in Q4 as loan loss provision surges

Huge loan loss provisioning led IDBI Bank to report a loss of ₹1,736 crore in the fourth quarter ended March 31, 2016, as against a profit of ₹546 crore in the year-ago period.

In the preceding quarter (October-December 2015), the government-owned bank had reported a loss of ₹2,184 crore.

In the financial year ended March 31, 2016, the bank logged a loss of ₹3,665 crore (against ₹873-crore profit in the previous year).

Loan loss provisions in the reporting quarter jumped to ₹4,275 crore (₹1,393 crore).

Net interest income (the difference between interest earned and interest expended) was down 14 per cent at ₹1,428 crore (₹1,660 crore).

Other income, including commission, exchange & brokerage, profit on sale of investments, and recovery from written-off cases, declined 32 per cent to ₹1,346 crore (₹1,970 crore).

Net interest margin edged lower to 1.67 per cent (2.10 per cent).

Fresh slippages, including restructured accounts, jumped to ₹10,260 crore (₹5,839 crore in the preceding quarter). Gross non-performing assets to gross advances ratio rose to 10.98 per cent as of March-end 2016 from 5.88 per cent as of March-end 2015.

Year-on-year deposits and advances edged up 2 per cent and 4 per cent to ₹2,65,720 crore and ₹2,15,893 crore, respectively, as of March-end 2016.

Kishor Kharat, MD & CEO, said, FY16 was a year of consolidation for transforming the bank. As part of this consolidation exercise, corporate loans as a percentage of total loans came down to 64 per cent from 67 per cent while retail loans went up to 36 per cent from 33 per cent. Savings bank deposits increased to 15 per cent from 13.36 per cent of total deposits.

“All accounts under the asset quality review have been addressed (either resolved or downgraded) by us. We controlled risk-weighted assets to a great extent, resulting in capital release of 70-80 basis points,” said Kharat.

Further, with the RBI allowing revaluation reserves (at 55 per cent discount) to be included in Tier-I (CET 1-common equity) capital, the bank got a revaluation surplus of ₹3,936 crore.

The bank sold 10 loan accounts aggregating ₹1,200 crore to asset reconstruction companies during the reporting quarter.

On Friday, IDBI Bank shares closed at ₹64.10 apiece, down 0.47 per cent over the previous close on the BSE.