MUMBAI: State-run lender IDBI Bank’s net loss widened to Rs 5,663 crore for the quarter ended March 31, 2018, as against a loss of Rs 3,200 crore during the same period a year ago.
This is the sixth consecutive quarterly loss for the ailing bank, which saw more than a quarter of its loan book turning bad as on March 2018. IDBI’s is also the third-largest quarterly loss incurred by Indian banks during the March quarter, only after the Punjab National Bank and the State Bank of India.
In an act of self-imposed punishment, the Mumbai-based lender has decided to halt corporate lending, besides vowing to prune its overseas operations. Currently, IDBI’s loan outstanding to corporates is at Rs 1.1 lakh crore.
As it is, the bank’s advances registered a de-growth of 10 per cent during FY18, prompting the management to wound up 25 loss-making branches. Thirty one more branches are up for closure this financial year, said Mukesh Kumar Jain, CEO, IDBI Bank.
Gross NPAs shot up to 28 per cent during the March quarter, three per cent up from the preceding quarter, while net NPAs stood at 17 per cent as against 16 per cent a year ago.
Consequently, provisions jumped to Rs 10,773 crore against Rs 6,209 crore a year before. For FY17, divergence in gross NPAs stood at `10,282 crore, while divergence in provisions was at Rs 4,464 crore in FY17.
Slippages during the quarter under review stood at Rs 12,800 crore, of which Rs 9,800 crore was due to RBI’s new stressed assets framework. The bank’s net interest income plunged 44 per cent, while net interest margin stood at 1.81 per cent.
The bank was brought under RBI’s prompt corrective action framework last May, compelling IDBI to switch to a capital-light model. This meant reduction of high-risk loans to industries and amplified focus on retail lending. According to Jain, this shift in model helped the bank reduce its risk-weighted assets.
Meanwhile, Jain explained that the sale of some of its non-core assets helped the bank release about Rs 4,500 crore capital during FY18. The plan to raise more through asset sales will continue this year including up to 30 per cent stake sale in IDBI Mutual Fund.