IDBI Bank gains 38% in last four sessions1 min read . Updated: 25 Sep 2019, 12:21 PM IST
- The stock climbed 10.7% intra-day on the BSE on Wednesday, and touched a three-month high of ₹37.75
- Year-to-date, it has fallen nearly 40.33%
Shares of IDBI Bank Ltd advanced over 38% in the last four sessions on Wednesday. The stock climbed 10.7% intra-day on the BSE on Wednesday, and touched a three-month high of ₹37.75. Year-to-date, it has fallen nearly 40.33%.
On 3 September, Mint reported that the lender will get a ₹9,300-crore infusion from its parent Life Insurance Corp of India and the government to help narrow the ailing lender’s losses and boost its lending capacity.
As part of the recapitalization plan approved by the Union Cabinet on Tuesday, IDBI Bank will get ₹4,557 crore from the government, and state-owned LIC will pump in an additional ₹4,743 crore to improve the bank’s capital buffers. The government, the erstwhile owner of the bank, held a 46.46% stake in the lender as of June.
After the capital infusion, IDBI Bank will be able to raise more capital on its own and is expected to come out of the banking regulator’s PCA programme sometime next year, the Mint report added.
Earlier, Mint reported that the Life Insurance Corp-owned private sector lender IDBI Bank had sought bids from asset reconstruction companies (ARCs), banks, non-banking financial companies (NBFCs) and other financial institutions to sell 20 non-performing loans worth ₹9,756 crore.
Last month, rating agency S&P Global put the lender's unsecured debt on credit watch on worries for breaching its regulatory capital requirement.
The company reported a ₹3,801-crore loss in the June quarter, its 11th consecutive quarterly loss.
"Higher credit costs led to another quarter of negative earnings for IDBI Bank. With the management intending to bring net NPAs down to 6% by December, we believe credit cost would be high for a couple of quarters, keeping earnings negative," Anand Rathi said in a 17 August report.
The bank's asset quality improved marginally in the June quarter. Gross NPA ratio improved to 29.12% as on June 30, 2019, against 30.78% a year ago. Net NPA ratio improved to 8.02% as on June 30, 2019, from 18.76% in the same quarter last year, and 10.11% as on March 31, 2019. Net NPAs reduced to Rs. 10,963 crore as on June 30, 2019, against ₹29,981 crore in the same period last year.