IDBI Bank, BoM report rise in interest income

Mumbai: Private lender IDBI Bank on Thursday reported a 75 per cent rise in net profit to Rs 567 crore for the second quarter ended September 30 on improvement in net interest income and drop in provisions and expenses. The bank had made a net profit of Rs 324 crore in the same quarter of the last fiscal.

Analysts expect many banks to report improvement on asset quality and retail fronts for the September quarter.

IDBI Bank’s net interest income rose 9 per cent at Rs 1,854 crore for Q2 FY22.

The net interest margin (NIM) improved by 32 basis points at 3.02 per cent on a year-on-year (YoY) basis. Its provisions declined by 12 per cent to Rs 642 crore in Q2FY22 from Rs 730 crore in Q2FY21. Gross non-performing assets (NPAs) ratio improved to 20.92 per cent on September 30, 2021 against 25.08 per cent a year ago.

The LIC-controlled bank came out of the RBI’s prompt corrective action (PCA) framework in March 2021. The bank was put under the PCA framework in May 2017, restricting expansion, investments and lending.

In another promising start to the earnings season, state-owned Bank of Maharashtra (BoM) doubled its net profit at Rs 264 crore in the September quarter against Rs 130 crore in the same quarter last year on a sharp rise in net interest income and recovery from DHFL.

BoM’s gross NPAs declined to 5.56 per cent from 8.81 per cent in the corresponding quarter of the previous year. Its gross advances rose 11.44 per cent to Rs 115,235 crore and total deposits were up by 14.47 per cent to Rs 181,572 crore. Its managing director and chief executive officer A.S. Rajeev said he expects 14-15 per cent credit growth during the current fiscal.

Karthik Srinivasan, head-financial sector ratings at Icra Ltd, said, “There would be some growth for some banks on the retail front. The collection efficiencies have improved so there would be some improvement on the asset quality front. However, restructuring will go up as the RBI’s restructuring window closed on September 21, So, there would be some increase in restructuring. Otherwise, we don’t exp-ect any deceleration on profit or on asset quality.”

Yuvraj Choudhary, research analyst at Anand Rathi Research, said, “For most lenders, collection efficiency (CE) hit pre-Covid levels in Q1 FY22, and is expected to continue. Our channel checks show CE improved in September 2021. We estimate slippages to have been high, led by retail and SME; however, the quantum is likely to have moderated sequentially, keeping asset quality in check. NIMs are expected to have been steady, supported by lower cost of funds. Though overall system credit growth is in single digits, retail and SME are seeing a gradual pick-up.”


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