IDBI Bank, Bank of Baroda post massive Q4 losses as provisions surge

Mumbai: State-owned banks IDBI Bank and Bank of Baroda on Friday reported huge losses at the end of the March quarter after setting aside funds to cover rising bad loans.

IDBI Bank reported a net loss of Rs5,662.76 crore in the three months ended 31 March, against Rs3,199.77 crore during the same quarter in the previous year.

Provisions more than doubled to Rs10,773.30 crore from Rs3,637.49 crore at the end of the December quarter. The bank’s gross non-performing assets (NPAs) ratio rose to 27.95%, compared to 24.72% at the end of the December quarter.

In a press conference after announcing earnings, IDBI Bank managing director and chief executive officer M.K. Jain said the bank has identified Rs21,397 crore of bad loans to be put for sale, which includes 30 large corporate accounts. He also said that the bank has added fresh bad loans worth Rs12,823 crore in the fourth quarter.

“Most of the legacy issues on asset quality have been recognized. We hope to turn around by the end of the financial year, on the back of IBC resolutions,” Jain said.

The rise in bad loans was because of a Reserve Bank of India (RBI) review that revealed a divergence in reporting of gross NPAs based on fiscal 2017 results. Such divergence—the difference between RBI’s assessment and that reported by the lender—was around Rs10,281 crore at the end of March 2017.

The bank’s net interest income—the difference between interest earned and paid—declined by 43.9% to Rs915.47 crore in the March quarter, as compared to Rs1,633.3 crore in the corresponding period a year earlier.

Separately, Bank of Baroda on Friday reported a fourth quarter net loss of Rs3,102 crore on the back of lower other income and higher provisioning.

The bank posted a net loss of Rs3,102.34 crore for the three months ended 31 March, compared to a profit of Rs154.72 crore in the year-ago period. The loss was higher than the Rs28.03 crore estimated by a Bloomberg poll of 18 analysts.

Net interest income in the March quarter rose 11.74% to Rs4,002.26 crore from Rs3,581.86 crore in the corresponding period last year.

Other income, which includes core fee income, fell 14.23% to Rs1,695.90 crore in the three months from Rs1,977.28 crore a year ago.

Gross NPAs, as a percentage of total advances, were at 12.26% in the March quarter compared with 11.31% in the December quarter and 10.46% in the year-ago March quarter.

Provisions during the quarter increased two-and-a-half fold to Rs6,672.38 crore as against Rs2,622.97 crore in the year-ago quarter. In the October-December quarter, the bank had set aside Rs3,426.51 crore in provisions.

Post-provision, the net NPA ratio was at 5.49% against 4.97% in the October-December quarter and 4.72% in the year-ago quarter.