IDBI Bank hits 20% UC

IDBI Bank is currently the top gainer on the BSE. The stock, which had closed on Friday at Rs.20.30, hit its 20% UC as soon as it opened at Rs.24.35.

The Bank’s Q4FY20 earnings showed that it has met two out of the three parameters required to get out of RBI’s Prompt Corrective Action (PCA) framework.

Firstly, its Capital Adequacy Ratio (CAR) rose to 13.31% which well above the PCA trigger at 10.25% for two consecutive years.

Secondly, its net NPA came in at 4.19% which is also much better given that PCA’s threshold is when NPA goes over 6% for two consecutive years.

Its only on the third aspect – the RoA which remains in the dark. It remains in the negative at -4.26% v/s -4.68%. Analysts are of the opinion that it will remain in the negative for two more years but when the other two criteria have been fulfilled, maybe the RBI should change the status from PCA. But given the pandemic, RBI might not exactly be in a tearing hurry to change this any time soon.

The Bank posted a net profit of Rs.135 crore, first time in 13 quarters. Its loss in previous Q4 stood at Rs.4918 crore. This was thanks only to the write-back of provisions at Rs.1511 crore.

In terms of asset quality, Gross NPA remained high at 27.35% though lower than 29.72% (QoQ) and net NPA fell from 5.25% to 4.19%.