MUMBAI (CU)_During final quarter of 2021, IDBI Bank’s cost of funds fell by 60 basis points to 3.79 per vent. This triggered a 31 per cent hike in the bank’s net interest income to ₹23.83 billion, leading to a record increase of 53 per cent in net profit in 2021.
Accordingly, during the four months leading up to 31 December, the Mumbai-based private banking company registered a net profit of ₹5.78 billion, a sharp increase from the ₹3.78 billion a year ago. The fall in cost of funds also prompted an improvement in the bank’s net interest margin, which jumped by 101 basis points to 3.88 per cent. However, IDBI’s loan growth remain tepid at 5 per cent, with a 13 per cent annual growth in mid corporate loans and a 5 per cent growth in retail, agriculture and micro enterprises. Total deposits, on the other hand dropped by 1 per cent, according to recent figures.
The firm’s chief executive Rakesh Sharma acknowledged the bank’s slow loan growth, but projected a 10 per cent increase in the next fiscal year, led by retail and mid corporate loans. During the first nine months of 2021, IDBI Bank’s settlements and recoveries reached ₹43.34 billion, which jumped by another ₹5 billion during the final quarter. In the month of December, recovery from write off accounts jumped to ₹3.08 billion, nearly tripled from the ₹1.05 billion from a year ago.
Meanwhile, lower additions and higher recoveries in non-performing assets led the bank’s NPA ratio to 20.56 per cent, from 23.52 per cent a year ago. According to Sharma, the bank also benefitted from an income tax refund of ₹3.53 billion which help boost the firm’s interest income. “The bank is confident of maintaining a NIM of above 2.5 per cent in the next fiscal year,” he said.
