Mumbai: State-owned IDBI Ltd on Monday posted a 57% rise in July-September net profit, helped by growth in both the net interest income and fee-based income, beating analyst forecasts.
Net profit of the bank for the second quarter was at Rs2.54 billion, up from Rs1.62 billion a year ago. A Reuters poll of brokerages had estimated profits at Rs1.95 billion.
“Profitability grew on the back of good growth in the net interest income and fee-based income front,” Yogesh Agarwal, chairman and managing director, told reporters at a press conference.
The bank’s net interest income rose to Rs4.72 billion, up from Rs1.29 billion a year ago, while fee-based income rose 99% to Rs3.90 billion.
Its net interest margin rose to 1.07%, up from 0.41% a year ago with cost of deposits coming down as high cost deposits were getting retired, Agarwal said.
“Core income helped profits grow for the bank,” said an analyst in a Mumbai-based brokerage, on condition of anonymity.
The bank, with a capital adequacy ratio of 11.9%, is waiting for government approval to raise funds for growth.
“Government owns around 52% in the bank and it will have to take a call on modes of capital-raising to be made available to the bank,” he said.
“We hope to tap the (capital) market by January 2010, subject to government deciding on mode of capital raising to be adopted by the bank,” he said.
Its capital adequacy at tier I level was at 6.83%, while that in the tier II segment was at 5.07%.
The bank will also raise $225 million via syndicated loans to meet its growth targets, R.K. Bansal, chief financial officer, said adding the bank is targeting a loan growth of 20% in the current fiscal.
“We will be signing for this foreign currency loan tomorrow,” he said. The loan will be for a one-year tenure with an all-inclusive cost of 6.2%.
The bank which would open its first foreign branch in Dubai has an enabling resolution to raise up to $1.5 billion via medium term notes in foreign currency, Bansal said adding it can be raised only after the lender has a foreign presence as per Reserve Bank of India guidelines.