Life Insurance Corporation-promoted IDBI Bank is looking to sharply bring down its non-performing loans over the next one-year period while working on ramping up its credit growth. 

The lender is expecting gross non-performing assets (NPAs) to fall below 17% of gross advances by end-March 2022 and 12% by FY23. 

As on 31 December 2021, gross NPAs fell to 20.56% compared to 21.85% a quarter ago.

Net NPAs were at 1.7% in the December quarter, compared to 1.94% in the same quarter of the last financial year. 

IDBI Bank’s gross NPAs would fall by 4 percentage points after transferring about Rs 11,000 crore of stressed assets to the National Asset Reconstruction Company Ltd (NARCL), its managing director and CEO Rakesh Sharma said. 

IDBI Bank expects to achieve recoveries of Rs 5,000 crore in FY22, Sharma added. The lender has already made recoveries to the tune of Rs 4,334 crore, exceeding its earlier projection of Rs 4,000 crore. 

The bank looks to post year-on-year loan growth of 8-10% in FY22 and more than 10% in FY23. 

When the bank was under the Reserve Bank of India’s prompt corrective action (PCA), there was de-growth in corporate advances, said Sharma. But during the fiscal third quarter ended December, the bank has shown 13% year-on-year growth in mid-corporate advances, which has been its focus area and where it has decided to take smaller exposure to good companies. 

“Going forward, our policy is to grow quality advances to show reasonable, sustainable and calibrated growth…so that we don’t face slippages and stress. Looking at the Covid situation, we have to be quiet calibrated in our approach. We have to take calculated risks,” said Sharma. 

IDBI Bank deputy managing director Samuel Joseph said that most of the growth that has come in the mid-corporate advances segment in the third quarter is from the bank’s existing good clients.

The bank reported a 53% year-on-year jump in standalone net profit to Rs 578 crore for the fiscal third quarter ended December 31, 2021. This was due to higher net interest income and lower provisions. 

Net interest income (NII) stood at Rs 2,383 crore, up 31% year-on-year. Net interest margin (NIM) stood at 3.88%, 101 basis points (bps) higher on a year-on-year basis and 86 bps higher sequentially.

The bank’s total income fell to Rs 5,772.86 crore during the December quarter compared to Rs 6,003.91 crore in the same period of 2020-21, the private sector lender said in a statement.

The bank’s gross advances grew 4.8%  year-on-year to Rs 1.67 trillion as on 31 December. The ratio of corporate to retail loans stood at 37:63 as on 31 December 2021, compared to 40:60 a year ago.

Total deposits declined 0.8% year-on-year to Rs 2.22 trillion at the end of Q3 FY22. Current and savings account (CASA) grew 11% to Rs 1.21 trillion from Rs 1.09 trillion a year ago. CASA comprised 54.69% of total deposits versus 48.97% in the year-ago period.

Provisions for bad loans and contingencies stood at Rs 801.81 crore for the December quarter, as against Rs 867.97 crore earlier.

As on December 31, 2021, the bank had Covid-19 related provisions of Rs 863 crore, other than provisions held for restructuring under the pandemic norms, it said.