IDBI Bank Ltd reported a loss of Rs 5663 crore for the fourth quarter as the state-run lender booked higher provisions following stricter central bank rules on bad loans.
Banks saw soured loans and provisions surge in the quarter after the central bank in February eliminated half a dozen loan restructuring schemes to hasten the clean-up of near-record levels of bad debt.
Gross non-performing assets (GNPA) divergence of Rs 10,282 crore for FY17 was perhaps the highest ever GNPA divergence reported by an Indian commercial bank in the history of Indian banking so far.
The GNPA of IDBI Bank increased to 28% and is the second-highest in the BFSI sector, beaten only by Industrial Finance Corporation of India (IFCI), and is the highest among commercial banks.
The bank reported a net loss of Rs 5663 crore, the highest quarterly loss for the bank. Balance sheet shrinkage continued as business (deposits + advances) of the bank declined by 8.6% YOY and 0.14% QOQ.
On a positive side, the bank is better capitalized than few PSU banks, especially, its better capitalised than Punjab National Bank.
IDBI bank is already one of the 11 banks under prompt corrective action list of RBI.
Bank reports divergence of Rs 10,282 crore; but slippages of Rs 12,832 crore contains Rs 9800 crore coming in due to the impact of RBI’s circular.
IDBI Bank reported slippages of Rs 12,832 crore in the fourth quarter of FY18. However, the bank had slippages of Rs 9,800 crore coming in due to the February 12 circular of RBI.
While in the first place, its hard to believe that IDBI Bank can report such huge divergence, especially when the Gross NPA of the bank in FY17 was more than a fifth of their book at 21.3%.
Bank had a GNPA divergence of Rs 10,282 crore on its FY17 book. The GNPA divergence formed 5.4% of FY17 loan book, which means, the actual GNPA (as per RBI) should have been at 26.7% of the loan book.
The bank wrote off NPA’s worth Rs 4,900 crore in fourth quarter of FY18. Quarterly slippages are the highest for the bank at Rs 12,832 crore compared to Rs 4,439 crore, up 188.4% QOQ.
Annualized slippage ratio at 29.9% compared to 9.7% QOQ. Even if you remove the one-off RBI policy led slippages, other slippages at Rs 3,000 crore is still high.
So, the question is, where does the GNPA divergence go and will they get reported in coming quarters or how much of the GNPA divergence have been taken into slippages of FY18?
Amongst peers, it looks like IDBI Bank is the most stressed bank
IDBI Bank has the highest GNPA ratio amongst Indian Commercial Banks.
Even in absolute value, the GNPA of IDBI Bank is the 3
rd highest amongst banks.
IDBI Bank has reported the 3rd highest net loss amongst PSU banks who have shown results so far.
Sixth consecutive quarter of net loss reported by the bank
Net loss continues for the sixth consecutive quarter. The total net loss reported by the bank in six quarters is at Rs 5,663 crore with continuous deterioration seen in asset quality
How the quarter panned out in terms of numbers: Q4FY18 – YOY Net Interest Income at Rs 915.5 crore vs Rs 1633.3 crore, down 44% (down 45% QOQ) Net loss at Rs 5662.8 crore vs net loss of Rs 3199.8 crore
Provisions at Rs 10544.3 crore vs Rs 6209.6 crore YOY & vs Rs 4179.1 croer QoQ Asset quality deteriorates with GNPA now at 28% – QOQ GNPA at Rs 55588.3 crore vs Rs 50621.8 crore NNPA at Rs 28665.1 crore vs Rs29352.5 crore GNPA at 27.95% vs 24.72% NNPA at 16.69% vs 16.02% Provision coverage ratio at 63.4% vs 56.99% Other highlights
Balance sheet shrinkage continues as: Deposits at Rs 24,7932 crore, down 7.7% YOY & up 4.6% QOQ Advances at Rs 171740 crore, down 10% YOY & 6.3% QOQ Provision for NPA at Rs 10773.3 crore, up 69.8% YOY & 152.3% QOQ Annualized credit cost at 25.1% vs 11.2% YOY & vs 8% QOQ Other income aids operating profit. Other income at Rs 2699.7 crore, up 154.3% YOY & 218.1% QOQ Cost to income ratio at 34.7% vs 48.4% YOY & vs 43.5% QOQ Capital Adequacy Ratio at 10.41% vs 10.7% YOY & vs 11.93% QOQ