Huge loan-loss provisioning took a toll on IDBI Bank ’s financial performance, with the net loss drastically widening to ₹3,200 crore in the fourth quarter ended March 31, 2017, as against ₹1,736 crore in the year-ago quarter.

For fiscal 2016-17 too the public sector bank’s net loss widened to ₹5,158 crore as against ₹3,665 crore in the year-ago period.

The Reserve Bank of India had, on May 5, initiated prompt corrective action for the bank in view of high net non-performing assets and negative return on assets.

The bank said the action will not have any material impact on its performance and will contribute to improving its internal controls and activities.

In the reporting quarter, loan-loss provisioning skyrocketed to ₹5,333 crore as against ₹186 crore in the year-ago period. Due to higher provisions, net worth, excluding intangibles, as at March-end 2017 declined 23 per cent to ₹11,429 crore (₹18,158 crore as at March-end 2016).

As at March-end 2017, gross non-performing assets (GNPAs) to gross advances ratio deteriorated to 21.25 per cent from 10.98 per cent a year earlier.

Net NPAs to net advances ratio worsened to 13.21 per cent from 6.78 per cent.

In absolute terms, GNPAs soared to ₹44,753 crore from ₹24,875 crore as at March-end 2016. Fresh slippages, including those due to ageing, was higher in the reporting quarter at ₹12,467 crore (₹10,260 crore in the year-ago period).

Low-cost current account, savings account (CASA) deposits increased to 31.46 per cent of total deposits in the reporting quarter as against 25.97 per cent in the year-ago quarter.

The bank seems to be succeeding in rebalancing its loan portfolio, with the composition of retail advances in overall advances going up to 43 per cent in the reporting quarter from 33 per cent in the year-ago quarter. Simultaneously, the proportion of corporate advances in overall advances has come down to 57 per cent from 67 per cent.

While net interest income (difference between interest earned and interest expended) was up 14 per cent y-o-y at ₹1,633 crore, other income was down 21 per cent to ₹1,062 crore.

The net interest margin improved to 1.75 per cent in the reporting quarter as against 1.67 per cent in the year-ago quarter.

Rating unchanged Meanwhile, S&P Global Ratings said its rating on IDBI Bank (foreign currency ‘BB/Stable/B’) is not immediately affected by the bank’s substantial loss in the fourth quarter of FY17.

S&P said: “Our ‘B-’ assessment of IDBI’s standalone credit profile (SACP) already factors in the bank’s inherent weakness in asset quality, moderate capitalisation, and the ongoing stress on earnings. “Our ‘BB’ rating on IDBI also reflects our expectation of a very high likelihood that the Indian government will continue to provide extraordinary support to the bank, given IDBI’s very strong link with, and very important role to, the government.”

The agency added that its current rating on IDBI already reflects its expectation that the bank’s asset quality will remain very weak during the year.

The loss, according to the credit-rating agency, lowered IDBI ’s common equity Tier 1 (CET1), including the capital conversion buffer (CCB), ratio to 5.75 per cent (the minimum requirement for CET1 + CCB is 6.75 per cent), causing it to dip into the CCB.

As per IDBI Bank’s presentation to analysts, the CET1 + CCB ratio was at 5.64 per cent as at March-end 2017 as against 7.98 per cent as at March-end 2016.

IDBI Bank shares closed at ₹70 apiece, down 7.77 per cent over the previous close on the BSE.

Also read: India Ratings downgrades IDBI Bank

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