Last Tuesday, the state-owned financial institution, IDBI reported a net loss of Rs. 2,254.96 crores for the third quarter ending December 31, 2016.
The bank incurred this loss due to decline in its total income. The total income of the bank including the income earned from interest payments, both declined consecutively and year -on-year basis. Consequently, the net interest margin of the bank also shrunk.
The bank’s total income decreased by 3.5% to Rs.7,104.21 crores in Q3FY17 as compared to Q3 of FY16. The total interest income of the bank was Rs. 6, 553.06 crores for the same quarter. The net income of the bank came down to Rs. 850.38 crore ( in the same quarter) which is 45% down on year on year basis.
IDBI Bank also witnessed a deterioration in terms of asset quality in Q3, both consecutively and annually. However, the bank’s deposits surged during this quarter after the Government of India announced demonetization and decided to withdraw the existing currency notes of Rs. 500 and Rs.1, 000 in November, 2016. The demonetisation drive compelled many people to deposit their cash in bank accounts. Hence, the bank’s total deposit base increased by 27% to R2.98 lakh crore in Q3FY17 compared to the same quarter last year.
IDBI Bank’s provisions for its Q3 remained at Rs. 3, 205.52 crore which is 14% lower than its provisions for the same quarter in the previous financial year.
Despite the net loss incurred by the bank, the total deposits of IDBI Bank, including its current account and savings account deposits, increased by 44% year-on-year to Rs.84,660 crores at the end of Q3. The total assets of the bank increased by around 19% over the same period to Rs. 4,02 crores.