IDBI Bank in deep red

IDBI Bank is amongst the top five losers on the BSE currently, down almost 4% at Rs.53 levels. Volumes remain muted at around 83,000 shares. Market cap is at Rs.7110 crore.

The stock is in the red on the back of a dismal set of numbers for Q3FY14. It posted a 75% (YoY) fall in net profit at Rs.104 crore and this has been blamed on the higher provisioning of NPAs. Asset quality too has deteriorated. The bank’s provisioning jumped up from Rs.963 crore to Rs.1033 crore. What also added to its woes, along with this increased tab on provisioning is the fall in non-NII. NII grew 5% at Rs.1488 crore but non-NII which is often termed as other income, fell by a whopping 39% at Rs.532 crore.

Asset quality was also a concern with net NPAs or net bad loans rising to 2.93% from 1.93% (YoY) and Gross NPAs too rose, albeit much sharply, from 3.67% to 5.44%. During the current Q3, the bank also had a loss of Rs.37 crore on its bond portfolio. The RBI has allowed banks to amortize losses incurred by banks on their bond portfolios, due to a surge in bond yields during the July-September quarter. Following this, IDBI chose to spread those losses over the remaining quarters of the fiscal. All in all, a poor set of numbers and the market has rightly shown its displeasure.