Public sector lender IDBI Bank’s net profit growth was almost flat in the July-September quarter at ₹119.50 crore against ₹118.50 crore in the same period last year.
Profitability was weighed down by a rise in bad loans and provisions towards the same. Sequentially, profit declined 12 per cent from ₹135 crore.
Kishor Kharat, MD and CEO, said when it comes to earnings, the retail and commercial portfolios contributed more than 90 per cent in the reporting quarter. Retail and commercial loans have better spreads, which have helped the bank increase its net interest margin.
Net interest income (interest earned minus interest expended) grew 15 per cent to ₹1,612 crore from ₹1,406 crore a year ago. ‘Other income’ rose 11 per cent to ₹844 crore a from ₹760 crore in the same quarter last year.
Net interest margin (NIM) improved to 2.06 per cent from 1.93 per cent in the year-ago period. The bank expects to end the financial year with a NIM of 2.20 per cent.
Provisioning rises During the quarter, provisions towards bad loans were up 49 per cent to ₹1,086 crore (₹730 crore in the year-ago quarter).
Kharat said incremental slippages have been coming down over the last three quarters. From ₹2,200 crore in the fourth quarter of FY15, the incremental slippage came down to ₹1,417 crore in Q1 of FY16 and to ₹1,266 crore in the reporting quarter of FY16.
Year-on-year non-performing assets (NPAs) in gross terms increased to 6.92 per cent of total loans from 5.72 per cent in the September quarter last year.
Net NPAs also increased to 3.16 per cent from 2.79 per cent. Sequentially, however, net NPAs declined a tad from 3.18 per cent.
The IDBI Bank chief said that over the last few quarters the bank has been consolidating and rebalancing its loans and liabilities and has seen qualitative improvement in earnings. He added that in the third and fourth quarters there will be further improvement in earnings.
Retail loans now account for 32 per cent of total loans, against 28 per cent in the year-ago period, said BK Batra, Deputy Managing Director. The balance portfolio comprises corporate loans.
IDBI shares, after declining a tad post-results, ended 0.24 per cent higher, at ₹84.80 apiece, on the BSE on Wednesday.