IDBI Bank targeting bad loan recoveries worth Rs 4,000 crore in FY23: CEO Rakesh Sharma

IDBI Bank

IDBI Bank aims to recover bad loans worth Rs 4,000 crore in this financial year, while bringing down its gross non-performing assets (GNPAs) to around 12 percent of advances by March-end, its managing director and chief executive officer (CEO) Rakesh Sharma said on October 21.

“We have identified certain assets to be transferred to the NARCL (National Asset Reconstruction Company Ltd). The identified amount is around Rs 6000 crore to Rs 7000 crore by March,” Rakesh Sharma told reporters at a press briefing post-July-September earnings in Mumbai.

“This will help us reduce our gross NPA by four percent. Earlier, I had indicated that gross NPA will be below 15 percent by March, but I am sure that now we will be much below that number - maybe at around 12 percent.”

The bank has already recovered more than Rs 2,000 crore of bad loans in the first two quarters of this financial year, he said.

In the July-September quarter, IDBI Bank’s gross NPA as a percentage of gross advances fell more than 3 percentage points to 16.51 percent compared to the previous quarter, while the net NPA fell by 10 bps to 1.15 percent as of September FY23.

IDBI Bank’s endeavour is to keep net NPAs at the current level or bring it below, he said.

The comments come at a time when the Department of Investment and Public Asset Management (DIPAM) has floated an expression of interest (EoI) for potential bidders for strategic divestment of specified Government of India and LIC stakes in IDBI Bank along with the transfer of management control. The last date and time for submission of IDBI Bank EoIs is December 16.

Sharma said that he would not like to specifically comment on the progress of the divestment process.

“Our focus is to continue improving our performance so that the transition process becomes smooth,” Sharma said.

Outlook

Going forward, IDBI Bank is looking to explore avenues to achieve a business growth of 10-12 percent, Sharma said. Within this, the bank’s aim is to maintain the ratio of corporate to retail advances at 40:60, Sharma added.

Deposit growth, on the other hand, is expected to be around 8-10 percent for FY23, Sharma said. The lender is also not aiming to raise any capital in this financial year, the CEO added.

He also expects credit cost and net slippages ratio to be below 1 percent and 2.5 percent, respectively, on a sustained basis. The provision coverage ratio will be maintained above 90 percent, he said.

The focus of the bank will also be on maximising fee income and maintaining a net interest margin above 3.25 percent, Sharma said. The bank also targets to maintain a current account savings account ratio above 50 percent.

The private lender is also looking to tie up with fintechs to scale up the sourcing of business under personal loan and the education loan, Sharma added.

Q2 results

IDBI Bank on October 21 clocked a massive 46 percent year-on-year growth in standalone profit for the quarter ended September 30, despite a jump in provisions, backed by healthy NII growth and operating performance.

Standalone profit increased to Rs 828 crore during the quarter, up from Rs 567 crore in the corresponding period last fiscal. The sequential growth in profit was 10 percent.

Net interest income (NII), the difference between interest earned and interest expended, grew by 47.7 percent to Rs 2,738 crore for Q2FY23, with net interest margin (NIM) expanding by 135 bps YoY to 4.37 percent for the quarter, the bank said in its BSE filing. Sequentially, NIM expanded by 35 bps.

The bank reported net advances for the quarter at Rs 1.46 lakh crore, up 17 percent YoY and deposits at Rs 2.3 lakh crore, up 3 percent YoY.

IDBI Bank said the provisions and contingencies increased significantly by 77 percent YoY to Rs 1,380 crore in Q2FY23, and the sequential increase was 7 percent, while the provision coverage ratio improved by 56 bps YoY (up 7 bps QoQ) to 97.86 percent as of September FY23.