IDBI Bank: Q2FY14 Results Analysis

IDBI Bank has reported dismal performance in Q2FY14 numbers. The bank reported a sharp fall of 60.24% in its net profit for the quarter ended Sept 30, 2013 to stand at Rs 192.27 crore as compared to Rs 483.53 crore in the same period last year.

However, the net interest income (NII) grew by 18.75% to Rs 1483.6 crore in Q2FY14 against Rs 1249.32 crore in Q2FY13. It witnessed consolidated total income went up by 3.41% to Rs 7114.44 crore for the quarter ended Sept. 30, 2013 from Rs 6880.01 crore in the year ago period. Provisions and contingencies jumped 77.67% on yearly basis to Rs 878.72 crore in the quarter against Rs 494.58 crore quarter ended September 30, 2013. Other income surged by 15.24% to Rs 578.73 crore during September quarter from Rs 682.78 crore in corresponding quarter of last fiscal.

On the asset quality front, the bank reported a jump in Gross NPA which came in at 60.22% to Rs 9370.1 crore in year on year (YoY) against Rs 5848.13 crore in Q2FY13 and 17.73 % Q-o-Q. IDBI Bank ratio of net non-performing assets (NPA) to net advances stood at 2.82% as on 30 September 2013, compared with 2.16% as on 30 June 2013 and 2.04% as on 30 September 2012. The bank's ratio of gross NPA to gross advances stood at 4.98% as on 30 September 2013, compared with 4.34% as on 30 June 2013 climbed 64 basis points Q-o-Q and 3.45% up 153 bps Y-o-Y as on 30 September 2012.The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 12.38% as on 30 September 2013, compared with 12.58% as on 30 June 2013.

IDBI Bank reported weak performance for the quarter driven mainly by increased NPA and steep drop in treasury income. IDBI Bank's stock closed at Rs 65.90, down 3.94 % on the BSE. Stock is expected to witness selling pressure after the Q2 results.We suggest investors to tread in a cautious manner in the counter.