IDBI Bank expects to achieve bad loan recovery target for FY23, says MD

The bank is now targeting deposit growth of 8 to 10 percent.

IDBI Bank expects to achieve its bad loan recovery target of Rs 4,000 crore for FY23 on the back of improved economic sentiment and aggressive bids to cut down sticky assets, managing director Rakesh Sharma said.

The bank recovered almost Rs 3,400 crore at the end of the third quarter (October-December) and should easily achieve the target by the end of the financial year, Sharma said at an earnings press conference on January 23.
“We've just solved a pending case with the National Asset Reconstruction

Company Ltd., where we were the principal lender. Our exposure in the case was of Rs 3,750 crore out of Rs 9,000 crore to Rs 10,000 crore," Sharma said.

The lender's gross non-performing assets improved to 13.82 percent of gross advances for the third quarter of FY23 from 21.68 percent a year earlier.

“Expect a fall in our GNPA by 2.2 percent as we will cross our bad loans recovery target for the fiscal year 2022-23,” Sharma said.

Deposit growth outlook

IDBI Bank’s net profit was Rs 927 crore, growing 60 percent from a year ago and 12 percent from the previous quarter.

The bank’s total deposits increased 5 percent year on year to Rs 2.32 lakh crore, the slowest pace among peer banks.

“Deposit growth has not been up to our expectations. This is one area of concern for us. Hence, we have started taking bulk deposits,” Sharma said.

The lender’s average current account and savings account (CASA) deposits to total deposit ratio stood at 54.44 percent, reducing 25 basis points from 54.69 percent YoY.

“With the rising interest rate scenario, we've seen customers parking funds in term deposits. Hence, the same was reflected in our falling demand for CASA,” he said.

Sharma added that IDBI Bank will maintain the overall deposit composition and cost of deposits within the range of 10 basis points as its yield on advancement is also increasing.

The bank is now targeting deposit growth of 8 to 10 percent, Sharma said at the press conference.

Although the bank’s major work is around secure lending – about 93 percent of the loan book has a mortgage – Sharma said with rising demand for unsecured lending from customers, the bank will explore this avenue.

“We've started unsecured lending, but we are not going on it aggressively. Instead, we’ll plan and work,” Sharma said.

The Central government and Life Insurance Corporation of India plan to sell an over 60 percent stake in IDBI Bank and transfer management control of the lender.