State-run lender IDBI Bank has reported a net loss of ₹3,602.49 crore during the July- September quarter of 2018-19 compared with ₹197.84 crore in the year-earlier period on account of rise in bad loans which is now almost a third of its loan book.
The bank’s gross non-performing assets (NPAs) hit 31.78% of the gross advances, or ₹60,875.49 crore, as on September 30, 2018 against 24.98% or ₹51,367.69 crore in the year-earlier period. Net NPAs were 17.30%, up from 16.06%.
As a result, provisioning for NPAs for the quarter was raised to ₹5,481.64 crore from ₹2,842.15 crore. Fresh slippages during the quarter were ₹3,400 crore.
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MD & CEO Rakesh Sharma said the lender expected to return to profit in the first quarter of the next financial year.
“With ageing provisions (of NPA) set to decline, we expect to return to profitability in the first quarter of the next financial year,” Mr. Sharma said, adding net NPA ratio was expected to fall below 6% over the next three to four quarters.
The lender is under the prompt corrective action of the Reserve Bank of India due to higher bad loans that had eroded profitability and capital.
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The bank’s capital adequacy ratio dropped to 6.22% — well below the 9%-mark that is mandatory — but the bank expects the ratio to improve once stake sale process to Life Insurance Corporation of India is complete. LIC, which will have 51% stake in the bank, will infuse ₹20,000 crore, Mr. Sharma said. The deal was likely to be closed by the quarter end as some approvals are still awaited.