IDBI Bank had a few roadshows to gauge investor interest in sale of Life Insurance Corporation’s (LIC) stake in the lender but nothing significant has come out of it, said the top executive of the bank.

 IDBI Bank has, meanwhile, turned around and its balance sheet has started growing. In the quarter ended March 2022, the bank reported a 35% growth in net profit to Rs 691 crore from Rs 512 crore in the year-ago quarter. This was largely driven by lower bad loan provisions as non-performing assets (NPAs) came down. Net interest income (NII), however, declined sharply due to inclusion of interest on income tax refund in the corresponding quarter’s numbers.

 “The turnaround of IDBI Bank has really happened. The bank’s balance sheet has started growing after a gap of almost four years. There has been growth in corporate and retail advances. Now we are looking forward to improving the financials further," said IDBI Bank managing director and CEO Rakesh Sharma.

 Due to the high level of NPAs, the Reserve Bank of India (RBI) had put IDBI Bank under prompt corrective action (PCA) in May 2017 when there were curbs on lending and the bank had to focus on cleaning up its balance sheet. The curbs were lifted in March 2021.

 The bank is targeting loan growth of 10-12% in FY23, said Sharma. NPAs are expected to be less than 14% of the total loan book by March 2023, down from 19.14% in the last fiscal year, on the back of higher recoveries and transfer to the bad bank.

“As against our target of Rs 4,000 crore, we had recoveries of Rs 5,000 crore in FY22. Our target is that the gross NPA ratio will be less than 14% by March 2023 and by March 2024 it should be less than 10%," Sharma said.

The proportion of gross NPAs fell to 19.14% of gross loans at March-end 2022, compared to 22.37% a year ago.

In value terms, gross NPAs stood at Rs 34,115 crore as against Rs 36,212 crore in the year-ago period.

Net NPAs fell to 1.27% (Rs 1,856 crore) from 1.97% (Rs 2,519 crore).

For the quarter ended March 2022, provisions for bad loans and contingencies fell 72% to Rs 669.23 crore. Of this, provisions for bad loans stood at Rs 300.61 crore, as against Rs 1,119.65 crore.

The bank’s gross advances stood at Rs 1,78,207 crore as of March 2022, up 10.07% from the year-ago period. The sequential growth was 6.5%.

During the March quarter, deposits grew 1% year-on-year to Rs 2.33 lakh crore. The sequential rise was 4.75%.

"Our low-cost CASA (current account savings account) deposits have gone up. From a CASA mix of 38% in September 2018, we have grown to a level of 56%. Interest has come down, recoveries are up and asset quality has improved. The net interest income has grown by 26% to Rs 2,383 crore,” Sharma told reporters.

Cost of deposits in the last quarter of FY22 reduced by 48 basis points to 3.43% and cost of funds dropped by 47 bps to 3.69%.

Excluding interest income of Rs 1,313 crore on income-tax refund for the fourth quarter, the net interest income for the three-month period ended March 2022 rose 26% year-on-year. The net interest margin improved by 92 basis points over the previous year and 9 bps over the previous quarter.

Total income during the March quarter was lower at Rs 5,444.08 crore from Rs 6,894.86 crore a year ago.

For the full-fiscal, IDBI Bank's net profit grew 79% to Rs 2,439 crore compared to Rs 1,359 crore in the year-ago period.

Total income during the year was lower at Rs  22,985 crore from Rs 24,497 crore, mainly on account of fall in interest income as well as those from other sources.