BackIDBI Bank Q4 profit falls, OBC’s net up
Banks report subdued earnings as they set aside more money to cover bad loans
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Mumbai/Delhi: State-run banks that reported their fourth quarter earnings on Wednesday said profit fell or was little changed as the lenders set aside more money to cover bad loans.
Mumbai-based IDBI Bank Ltd posted a 6.53% drop in net profit while New Delhi-based Oriental Bank of Commerce’s (OBC) net profit remained little changed from a year earlier.
IDBI Bank’s profit fell to ₹ 518.23 crore in the three months ended 31 March from ₹ 554.45 crore in the year-ago period. Revenue increased 4.5% to ₹ 7,866.5 crore. Gross non-performing assets (NPAs) rose to 4.9% of the bank’s total loans from 3.22% in the year-ago quarter. Slippages, or good loans that are now in default, in the March quarter stood at ₹ 1,900 crore. But the bank managed to recover ₹ 1,400 crore of bad loans.
The slippages were on account of “two large accounts", chairman M.S. Raghavan said, without elaborating. The bank also restructured ₹ 1,300 crore of its loans in the quarter.
Raghavan said the bad assets may have peaked in the system but the stress will continue for a few more quarters.
“The stress has crept into the system because of economic conditions and unrealized cash flows. At least two quarters are needed for the stress to come down," Raghavan said at a post-earnings briefing. The bad-assets stress is showing signs of cooling off but heavy restructuring continues to remain the norm, a Mumbai-based analyst said, requesting anonymity.
Total provisions made by the bank during the March quarter rose to ₹ 1,198.50 crore from ₹ 869.12 crore in the year-ago period.
For the full year, IDBI Bank’s net profit fell 40% to ₹ 1,121 crore from ₹ 1,882 crore in the previous year.
Oriental Bank of Commerce reported fourth quarter profit rose to ₹ 310.32 crore from ₹ 307.94 crore in the year-ago period. It set aside ₹ 1,073.42 crore in the quarter, 68% more than a year ago.
Provisioning for bad debts increased 46% to ₹ 728.13 crore while provisioning for standard assets rose more than four times to ₹ 68 crore. Bad debts continued to rise with net non-performing asset ratio increasing to 2.82% from 2.27% in the year-ago period.
Net interest income, or the difference between interest earned on loans and paid on deposits, rose 7.82% to ₹ 1,308.70 crore while other income rose 63.4% at ₹ 754.54 crore. Net interest margin, a measure of profitability, narrowed to 2.72% from 2.82%.
Advances grew 8.13% and deposits rose 10%. For the full year, the bank reported a 14.2% drop in net profit to ₹ 1,139.41 crore from ₹ 1,327.95 crore in the year-ago period.
Shares of Oriental Bank fell 0.78% to ₹ 247.55 on BSE on Wednesday. Sensex shed 0.22% to 22,417.80 points. IDBI Bank’s stock rose 0.29% to ₹ 68.2.
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