IDBI Bank has continued to report net losses for the ninth straight quarter at Rs 4185.48 crore for the quarter ended December 2018 (Q3FY2019). The consistent decline in net interest income as well as non-interest income continued to weigh on bottomlines of the bank. The bank has witnessed sharp increase in operating expense in Q3FY2019. The pressure on asset quality and higher provisions continued to be major drag on bottomline of the bank in Q3FY2019. The net interest margin of the bank remained muted at 1.88% in Q3FY2019. The bank has continued to exhibit decline in business volume.

The bank has improved CASA deposits ratio to 38.4% end December 2018 from 38.1% end September 2018 and 36.1% end December 2017. The bank has exhibited improvement in asset quality, after consistent deterioration for last many quarters. The bank has also reduced fresh slippages of loan in Q3FY2019.

Asset quality improves: Bank has exhibited improvement in asset quality with strong NPA reductions in Q3FY2019.

• Fresh slippages of advances to NPA category stood at Rs 2995 crore in the quarter ended December 2018.
• The recoveries, upgradations and write-off together were strong Rs 8511 crore in Q3FY2019.
• The bank has sharply improved provision coverage ratio to 68.72% end September 2018.
• The bank has posted sharp 22% decline in risk weighted assets to Rs 192028 crore end September 2018.

Business Highlights:

Business volume continues to decline: Business of the bank has declined 6% to Rs 416546 crore end December 2018. Deposits declined 3% at Rs 229966 crore, while advances dipped 9% at Rs 186580 crore at end December 2018. Credit-deposit ratio of the bank was steady on sequential basis at 81.13% at end December 2018 from 81.08% a quarter ago, while declined from 86.41% a year ago.

Retail loans driving overall loan growth: The domestic corporate book of the bank declined 6% to Rs 174039 crore at end December 2018, while the overseas loans dipped 34% to Rs 12541 crore end December 2018. Within the overall loan book, the retail-lending book improved 5% to Rs 88780 crore, while corporate loans dipped 19% to Rs 97800 crore end December 2018.

CASA ratio improves: CASA deposits of the bank increased 3% to Rs 88206 crore at end December 2018 over December 2017. The CASA ratio of the bank increased to 38.36% at end December 2018 from 36.14% a year ago.

Network expansion: Bank has network of to 1894 branches and 3713 ATMs at end December 2018.

Book Value per share stood at Rs 44.06 per share at end December 2018, while adjusted book value (net of NNPA) stood at Rs 13.14 per share at end December 2018.

Quarterly Performance:

NII declines on muted margins and decline in loan book: Bank has reported 19% decline in NII to Rs 1356.87 crore for the quarter ended December 2018. Interest earned fell 5% to Rs 5492.82 crore, while interest expenses were flat at Rs 4135.95 crore in Q3FY2019. NIM of the bank has improved on sequential basis to 1.88% in Q3FY2019 from 1.80% in the previous quarter, while decline from 2.16% in the corresponding quarter last year.

Non-interest income dips: The bank has posted 47% dip in the non-interest income to Rs 698.12 crore in Q3FY2019. The core fee income of the bank also declined 11% to Rs 450 crore in Q3FY2019.

Net total income dipped 31% to Rs 2054.99 crore in the quarter ended December 2018.

Expense ratio surges: The operating expenses increased 22% to Rs 1329.74 crore, driven by 50% jump in employee expenses to Rs 608.36 crore in Q3FY2019. The other operating expenses increased 5% to Rs 721.38 crore in Q3FY2019. The expense ratio stood at 64.7% in Q3FY2019 sharply jumping from 36.6% in Q3FY2018.

The operating profit dipped 62%, yoy, to Rs 725.25 crore in Q3FY2019.

Provisions rises: The provisions for investment depreciation declined 10% to Rs 817 crore, while the bank has written back standard asset provisions of Rs 282 crore in Q3FY2019. However, the loan losses provision jumped 54% to Rs 5637 crore, causing 40% increase in overall provisions to Rs 6530.73 crore in Q3FY2019.

With the jump in provision, the pre-tax losses came in at Rs 5805.48 crore in Q3FY2019.

The bank has written back tax provisions of Rs 1620 crore, helping to reduce net losses to Rs 4185.48 crore in Q3FY2019.

YTD Financial Performance:

For the nine-months ended December 2018 (9MFY2019), the bank has posted net loss of Rs 10197.86 crore. The net interest income declined 9% to Rs 4296.35 crore, while non-interest income dipped 50% to Rs 2147.21 crore in 9MFY2019. The expense ratio jumped 2014 bps yoy to 58.78% in 9MFY2019 from 38.63% in 9MFY2019. The operating expenses increased 8% to Rs 3787.32 crore, while provision and contingencies moved up 84% to Rs 18346.51 crore in 9MFY2019. The pre-tax losses came in at Rs 15690.27 crore in 9MFY2019. The bank has written back tax provisions of Rs 5492.41 crore, helping to reduce net loss to Rs 10197.86 crore in 9MFY2019.

IDBI Bank: Financial Results