Gross NPAs cross Rs 50,000 crore: Nearly a quarter of IDBI Bank loans turns bad; loss at Rs 853 crore
Gross non-performing assets as a percentage of total loans surged to 24.1 per cent. In absolute terms, the bank saw gross bad loans jump to Rs 50,173 crore compared to Rs 44,752 crore in the previous quarter, an increase of 12 per cent. Gross non-performing assets as a percentage of total loans surged to 24.1 per cent. In absolute terms, the bank saw gross bad loans jump to Rs 50,173 crore compared to Rs 44,752 crore in the previous quarter, an increase of 12 per cent.
IDBI Bank on Monday reported a surge in bad loans in the April-June quarter with nearly a quarter of its loan book having turned non-performing assets (NPAs).
The bank reported a net loss of Rs 853 crore in the June 2017 quarter compared to a profit of Rs 241 crore in the year-ago period. In the fourth quarter of financial year 2016-17, the bank had reported a loss of Rs 3,200 crore and Rs 5,158 crore loss in the financial year 2016-17. While the reported loss was lower than the preceding quarter, bad loans continued to surge.
Gross non-performing assets as a percentage of total loans surged to 24.1 per cent. In absolute terms, the bank saw gross bad loans jump to Rs 50,173 crore compared to Rs 44,752 crore in the previous quarter, an increase of 12 per cent. Compared to the April-June quarter last year, bad loans at the bank have doubled from Rs 27,275 crore. Net NPAs stood at 15.8 percent. During the quarter ended June, the bank set aside Rs 2,069 crore as provisions.
The lender continues to report low capital adequacy levels and has even breached some regulatory requirements. At the end of the June quarter, IDBI Bank had a capital adequacy ratio of 10.92 per cent. In the notes accompanying the earnings release, the bank said that it received Rs 1,861 crore by way of capital infusion from the government on August 9. Had this infusion towards share application been considered as on June 30, overall CRAR would have been 11.69 per cent.
The bank also disclosed that its capital conservation buffer is at 0.2 per cent as against the regulatory requirement of 1.25 per cent.
Earlier this month, the bank indicated that it would pay coupon on its additional tier-1 securities on time contrary to fears that it may need to skip payments due to its weak capital position.
In May 2017, hit by losses and deteriorating asset quality, IDBI Bank had formulated a turnaround strategy focusing on augmenting capital base and recovery from bad loans. The bank had said it will look at reducing its operational cost and sell non-core assets over a period of time. It had said it will look at aggressive recovery and cost cutting measures and plan on churning our corporate book and risk weighted assets which should also ease the pressure on capital.
With higher NPAs and negative return on assets, the Reserve Bank has recently initiated ‘prompt corrective action’ for IDBI bank. Due to the bank’s weak profitability and deteriorating asset quality, Moody’s, India Ratings and Icra had downgraded the bank’s rating with a negative outlook. Moody’s has also put ratings of the lender under review for further downgrade.
Meanwhile, the bank said LIC had infused Rs 394 crore by way of preferential allotment of equity shares, out of which Rs 91 crore has been allotted and the balance Rs 303 crore has been accounted as equity share application money. Based on the RBI approval, the bank has considered this amount as CET1 capital.
The bank said recovery and upgradation improved from Rs 1,789 crore from March 2017 to Rs 2,118 crore during June 2017. Fresh slippages have reduced to Rs 7,659 crore as compared to Rs 11,531 crore during Q4 of FY17.
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