IDBI Bank Posts Moderate Q4FY13 Results
Vinaya Patil / 26 Apr 2013
While the bank's profit was not too encouraging as both the retail and treasury segment saw a decline in profit on a yearly basis, its NII has increased by 19% and its asset quality has improved sequentially.
IDBI Bank, one of the midsized public sector banks, came out with its Q4FY13 results yesterday (April 25, 2013). The bank posted net interest income (NII) of approximately Rs 1,440 crore for Q4FY13, which is up by 19% as compared to Q4FY12. The total interest income of the bank increased by a mere 5.2% on a yearly basis to Rs 6,396 crore. The reason for such muted growth is attributed to slower growth in advances that grew by 8.4% on a yearly basis. The net interest margin (NIM) of the bank for Q4FY13 was 2.19%, which is down by 8 bps on a sequential basis.
If we analyse the revenue growth of the bank segment wise, its corporate and retail side grew by 8% and 12% respectively on a yearly basis, whereas the treasury business declined by 18% in the same period.
However, the bank’s segment wise profit was not too encouraging and both the retail and treasury segment saw a decline in profit on a yearly basis. Retail banking slipped into losses of Rs 90 crore against profit of Rs 101 crore posted in Q4FY12. The treasury profit too dropped by 32% in the same period and posted profit of Rs 30 crore for Q4FY13. Corporate banking saw a marginal increase in profit by 1% to Rs 785 crore. All this led to an overall drop in the profit of the bank by 28% on a YoY basis to Rs 554 crore. The fall in profit would have been more had other income not grown by 45.8% to Rs 1146.89 crore for the quarter.
Nonetheless, the asset quality of the bank improved sequentially. The net NPA for Q4FY13 was 1.58% as compared to 1.61% for Q3FY13 and 1.93% for Q4FY12.
The board of the bank has also proposed a dividend of Rs 3.5 per share, which gives a dividend yield of 4% at the current share price of Rs 89. Currently, the IDBI bank is trading at a price to book value of 0.7x which looks attractive but looking at the deteriorating return on assets (ROA) of the bank (from 0.81% for FY12 to 0.69% for FY13) and higher GNPAs and NNPAs, they are likely to restrict any spurt in the share prices as of now.
However, long -term investors can enter the counter with an investment horizon of more than a year.
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