IDBI Bank Posts Decent Performance
DSIJ Intelligence / 24 Apr 2012
| Particulars (Rs / Crore) | Mar-12 | Mar-11 |
|---|---|---|
| Net Profit (Rs / Crore) | 770 | 516 |
| CASA (%) | 24.1 | 20.88 |
| NIM (%) | 2.07 | 2.07 |
| CAR (%) | 14.58 | 13.64 |
| Provisions (Rs / Crore) | 273.79 | 281.9 |
| Gross NPA (%) | 2.49 | 1.76 |
| Net NPA (%) | 1.61 | 1.06 |
| Return On Assets (%) | 1.17 | 0.89 |
| PCR (%) | 41.19 | 39.75 |
The bank’s net interest margin has remained stable at 2.07 per cent on a YoY basis while on a sequential basis it improved by 18 basis points, which is decent enough. The same was the case with the net NPAs of the bank, which decreased sequentially. However, it shows a substantial increase on a yearly basis which went up by 55 basis points while on a sequential basis it declined by 35 basis points to 1.61 per cent. The provision coverage ratio (PCR) of the bank is around 41 per cent, which is also low as compared to the RBI’s guidelines of around 68 per cent. The lower PCR further increases the risk of a deterioration in their asset quality going ahead.
As on March 31, 2012, the deposits of the bank increased by 17 per cent to Rs 2,10,493 crore while the advances of the bank grew by 15 per cent to Rs 1,81,158 crore on a YoY basis. The deposits of the bank grew above the RBI forecast of 15.5 per cent for FY12 while the advances grew lower by 100 basis points against the RBI’s projections of FY13. Further, the bank has exposure to risky and cash-strapped sectors which are facing headwinds.
Approximately 15 per cent of the total advances is towards the power sector while its exposure to the telecom sector is of around 6 per cent. The revenue for its treasury segment increased by more than 100 per cent to Rs 173 crore but the segment showed a decline in profit of 17 per cent to Rs 44 crore. The profit from its retail segment decreased substantially by 50 per cent to Rs 101 crore, thereby impacting the bottomline.
| Particulars (Rs / Crore) | FY12 | FY11 | % Change |
|---|---|---|---|
| Interest Earned | 23,369.93 | 18,541.24 | 26.04 |
| Other Income | 2,118.78 | 2,143.23 | -1.14 |
| Total Income | 25,488.71 | 20,684.47 | 23.23 |
| Interest Expended | 18,825.08 | 14,271.93 | 31.90 |
| Operating Expense | 2,607.46 | 2,254.69 | 15.65 |
| Total Expenditure | 21,432.54 | 16,526.62 | 29.68 |
| Operating Profit | 4,056.17 | 4,157.85 | -2.45 |
| Provisions | 1,426.47 | 1,876.87 | -24.00 |
| PBT | 2,629.7 | 2,280.98 | 15.29 |
| Tax | 598.09 | 630.66 | -5.16 |
| PAT | 2,031.61 | 1,650.32 | 23.10 |
Now let us look at the financial performance for the year 2011-12. Its net interest income increased marginally by 6 per cent to Rs 4,544 crore. However, the bottomline grew by 23 per cent to Rs 2,031 crore. This was on the back of lower provisioning by almost 24 per cent to Rs 1,426 crore which helped the bank to post decent profit for the full financial year. It was very shocking to see that operating profit of the bank de-grew by 2.45 per cent to Rs 4,056 crore due to higher interest outgo. The yield on assets increased by 65 basis points but the cost of funds increased by 93 basis points, thus impacting the profit.
With the interest rate taking a U-turn, the banking sector will tend to benefit going ahead, and so will IDBI Bank. On the valuation front, the bank is available at a price to book value (P/BV) of around 0.78 times, which is fair enough. We believe that the bank has shown some signs of revival on a sequential basis but we are not fully convinced about the bank’s potential in the near future. We would advise our investors to adopt a ‘wait and watch’ approach for the counter and the existing shareholders should hold the scrip over a longer period of time to garner better returns.
|
| Revenue | Profit | ||||
|---|---|---|---|---|---|---|
| Segment (Rs / Crore) | Mar-12 | Mar-11 | % Change | Mar-12 | Mar-11 | % Change |
| Treasury Operations | 173.19 | 85.06 | 103.61 | 43.82 | 52.93 | -17.21 |
| Retail Banking | 4,058.77 | 3,133.42 | 29.53 | 101.81 | 203.96 | -50.08 |
| Corporate Banking | 6,221.33 | 5,253.4 | 18.42 | 775.15 | 628.02 | 23.43 |
| Less Inter-Segment | 3,596.87 | 2,771.23 | 29.79 |
|
|
|
| Total | 6,856.42 | 5,700.65 | 20.27 | 920.78 | 884.91 | 4.05 |
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