The Hindu Business Line : IDBI Bank Q2 profit soars 56%

Mumbai, Oct. 26 A surge in income on investments and interest on income tax refund helped IDBI Bank post a robust 56 per cent increase in second quarter net profit at Rs 254 crore as against Rs 162 crore in the corresponding period last year.

In the half-year ended September 30, the public sector bank reported a 32 per cent rise in net profit at Rs 426 crore compared with Rs 322 crore in the corresponding year ago period.

In the reporting quarter, the bank’s total income, comprising interest earned and other income, increased by 42 per cent to Rs 4,283 crore (Rs 3,018 crore in Q2 FY09). Total expenditure, comprising interest expended and operating expenses, rose 33 per cent to Rs 3,646 crore (Rs 2,734 crore).

A break-up of the interest earned by the bank shows that interest/ discount on advances/ bills rose by 24 per cent to Rs 2,572 crore (Rs 2,068 crore), income on investments shot up by 115 per cent to Rs 1,064 crore (Rs 495 crore), and income from ‘others’ (interest on income tax returns amounting to around Rs 800 crore) to Rs 81.18 crore (Rs 1.88 crore).

Other income rose by 34 per cent to Rs 563 crore (Rs 421 crore).

As of September-end 2009, IDBI Bank’s advances stood at Rs 1,04,973 crore as against Rs 87,119 crore, registering an increase of 20 per cent. In the reporting second quarter, advances increased by Rs 7,018 crore as against a decline of Rs 5,473 crore in the first quarter.

According to the bank’s Chairman and Managing Director, Mr Yogesh Agarwal, the bank expects to maintain credit growth at 20 per cent for the whole of FY2010.

As of September-end 2009, deposits stood at Rs 1,30,677 crore as against Rs 79,445 crore, registering a 64 per cent growth.

The share of current account and savings account in total deposits fell to 14.76 per cent (16.2 per cent as of Sept-end 2009).

The amount of gross non-performing assets (NPAs) edged up to Rs 1,844 crore as of September-end 2009 as against Rs 1,652 crore as of September-end 2008. Provisions and contingencies shot up to Rs 383 crore in the reporting quarter as against Rs 122 crore in the corresponding period last year.

Given that the bank does not have much headroom to raise Tier-I capital (Government’s stake in the bank at 52.77 per cent is close to the 51 per cent threshold level), Mr Agarwal said the bank was awaiting clarification from the government on the mode of capital infusion (such as perpetual debt, rights issue).

Meanwhile, IDBI bank has tied up a $225 million one-year syndicated loan from 21 banks at 200 basis points above the inter-bank rate LIBOR.

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