A surge in bad assets resulted in newest private lender IDFC Bank on Wednesday reporting a 21% decline in the December quarter net at Rs 191 crore as its bad loans more than doubled, leading to provisions soaring nine times. The city-headquartered bank, which has its genesis in an infra-lender, reported a nine-time surge in provisions at Rs 233 crore as the lender saw a massive jump in fresh slippages to the tune of Rs 367 crore during the third quarter ended December 31.
The poor bottomline comes despite a healthy 32% growth in the core net interest income at Rs 535 crore, and a 60% jump in the non-interest income at Rs 320 crore in the period under review. The bottomline pain came in from massive slippages in its assets that saw fresh slippages of Rs 367 crore during Q3 which came from two legacy accounts from its infra lending days and one unspecified new account. Chief Financial Officer Sunil Kakar said the non- legacy account is a one-off event but the bank has provided much more than the regulator’s prescription of setting aside 15% of exposure.
The provisions were also up due to mark-to-market losses during the quarter and Kakar blamed this to the no rate cut by the RBI in the December policy review, which contributed “marginally” to the overall provisions. The gross non-performing assets ratio more than doubled to 7% from 3.1% a year ago, but Kakar said there is not much of a change in the stressed assets (NPAs and restructured books) as a bulk of the movement into NPAs was from recast accounts. The key profitability gague, net interest margin, improved to 2.1% from 2% in the year ago period, he said. The overall capital adequacy stood at 18.39% with the core capital at 17.98%. Since the numbers were announced well after the market hours, the IDFC Bank counter closed 2.90% up at Rs 65.55 on the BSE, whose barometer Sensex soared 334 points in a pre-Budget rally.