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Home / Companies / Company Results /  IDBI Bank Q1 profit rises 25% to 756 crore on lower provisions
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Mumbai: IDBI Bank on Thursday reported a net profit of 756 crore in the three months to June, up 25% year-on-year, on account of lower provisions.

The bank’s total provisions stood at 959 crore in Q1 FY23, down 48% from the same period last year. Its net interest income – difference between interest earned and expended – stood at 2,488 crore, down 1% year-on-year (y-o-y). The net interest margin, a key metric of profitability, stood at 4.02%, down 4 basis points (bps) y-o-y but up 5 bps from the previous quarter.

“Last year in June 2021, we had made recoveries of 1,600 crore from bad loans. Of this 868 crore was from two accounts -- Kingfisher Airlines and Videocon -- which had gone to interest income and recovery from written off accounts. As a result our operating profit was higher," said Rakesh Sharma, chief executive, IDBI Bank.

Sharma said that this year too, the bank has 1,136 crore of recovery but these have mainly gone to reversal of provisions. “That is why some decline will be visible in net interest income and operating profit on a y-o-y basis. But, if we see sequentially, there is an improvement," he said.

The bank made a gain of 141 crore from the sale of its stake in Asset Reconstruction Company (India) Ltd or (Arcil). In May, the bank had announced the divestment of entire holding of over 62.3 million equity shares in Arcil to Avenue India Resurgence Pte.Ltd.

“The turnaround which we had mentioned last time also, has really happened and for the first quarter after a long gap of four or five years, we have shown growth in (net) advances of about 12%. That was our guidance, against which we have been able to achieve almost all parameters," said Sharma.

Like its peers, IDBI Bank also witnessed a hit on its treasury income owing to hardening bond yields which led to a 34% y-o-y decline in other income to 1,140 crore. While its total deposits grew 1% y-o-y to 2.25 trillion, the bank’s total advances grew 8.7% to 1.7 trillion. The bank expects to grow its deposits as well as loanbook in the range of 10-12% in the current financial year.

“We have been continuously reducing our bulk deposits as a strategy to reduce our cost of deposits. We have been growing our current account savings account (Casa) by over 12% but this time it is 7.68% in current accounts and 7.43% in saving accounts y-o-y," said Sharma.

He said the Casa ratio has also improved from 52.43% in June 2021 to 55.65% as on 30 June this year. “Going forward when we start growing our advances, not only will be grow the Casa deposits but we may grow the bulk deposits also, depending on the requirement," he said.

 

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