IDBINSEQ4 FY2022May 2, 2022

IDBI Bank Limited

8,720words
99turns
5analyst exchanges
5executives
Management on call
Divya Purohit
ICICI SECURITIES
Rakesh Sharma
MANAGING DIRECTOR &
J. Samuel Joseph
DEPUTY MANAGING
Suresh Khatanhar
DEPUTY MANAGING
P. Sitaram
EXECUTIVE DIRECTOR AND CHIEF
Key numbers — 40 extracted
79%
rofit for the continuous two years and during the current year the net profit has increased Y-o-Y 79% and the ROA we have been able to achieve 0.8% of ROA and 13.60% of ROE. The main issues during th
0.8%
the current year the net profit has increased Y-o-Y 79% and the ROA we have been able to achieve 0.8% of ROA and 13.60% of ROE. The main issues during the last four years which we were facing was tha
13.60%
r the net profit has increased Y-o-Y 79% and the ROA we have been able to achieve 0.8% of ROA and 13.60% of ROE. The main issues during the last four years which we were facing was that our balance shee
rs,
as showing a decline, but now for the first year we have been able to show growth in all the sectors, retail as well as corporate and the overall growth has been 14%. Retail has grown by 7.06% so that
14%
le to show growth in all the sectors, retail as well as corporate and the overall growth has been 14%. Retail has grown by 7.06% so that way the growth momentum has started. Now our emp
7.06%
the sectors, retail as well as corporate and the overall growth has been 14%. Retail has grown by 7.06% so that way the growth momentum has started. Now our emphasis was also on reducing th
56.77%
f deposits substantially by increasing the low-cost deposits. The CASA deposits have increased to 56.77%, which is I think one of the highest in the industry and the cost of deposits also has declined t
3.56%
which is I think one of the highest in the industry and the cost of deposits also has declined to 3.56% so the save bank and CASA that current account both have shown growth of 14% both in percentage w
17.30%
growth of 14% both in percentage wise and amount wise there is increase. Net NPA which was around 17.30% as on September 30, 2018, it has come down to 1.27% and GNPA also which was 31% as on September 3
1.27%
there is increase. Net NPA which was around 17.30% as on September 30, 2018, it has come down to 1.27% and GNPA also which was 31% as on September 30, 2018, has come down to 19%. Of course I will ag
31%
ich was around 17.30% as on September 30, 2018, it has come down to 1.27% and GNPA also which was 31% as on September 30, 2018, has come down to 19%. Of course I will agree that the GNPA level is hig
19%
it has come down to 1.27% and GNPA also which was 31% as on September 30, 2018, has come down to 19%. Of course I will agree that the GNPA level is high, but the main reason is that we have not been
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Guidance — 20 items
Rakesh Sharma
opening
“Just to begin with of course the detailed presentation will be made by our CFO Mr.”
P. Sitaram
opening
“This is more or less where we had targeted it to be and going forward also we are looking at it more or less plus or minus a few basis points here and there it will be on this line.”
P. Sitaram
opening
“Now possibly going forward that would be a little muted.”
P. Sitaram
opening
“On the other things on forex of course recovery from written off cases we have done well this year but going forward there is a number of last ticket cases would be less.”
P. Sitaram
opening
“Therefore one can expect that recovery from written off cases would taper off a little over the next year, this will maintain around the same level that we have.”
P. Sitaram
opening
“More or less as I said that we had stabilized at about mix of corporate and retail and I think that fare will be maintaining plus or minus some 3% to 4% on either side.”
P. Sitaram
opening
“This will be the trajectory going forward.”
P. Sitaram
opening
“As per the outstanding balance, we will be maintaining that Rs.415 Crores provision and then in the earlier provisions that we have made out of that two components we had taken out and on that now as I said that we have also made new provisions that I have already described here both in terms of family pension full amortization and also in terms of SASF full provision.”
P. Sitaram
opening
“More or less I mean NCLT now that things are stabilizing, we can expect that there will be a little more movement in the cases pertaining to NCLT and perhaps some amount of recovery is possible but big-ticket cases are not many there so in terms of volume for us, it will increase but in terms of amount it will be not as significant as it was earlier.”
P. Sitaram
opening
“We will be watching that portfolio as we go ahead and as of now it is not possible to say exactly how that portfolio will behave.”
Risks & concerns — 12 flagged
The main issues during the last four years which we were facing was that our balance sheet was degrowing because we were under PCA, especially because of the corporate advances there was reduction in the advances level, though in retail we were growing at robust space, but the mid corporate and large corporate was showing a decline, but now for the first year we have been able to show growth in all the sectors, retail as well as corporate and the overall growth has been 14%.
— Rakesh Sharma
NIM has improved by 35 basis points to 3.73 and if we exclude the impact of this interest on income tax defer the NIM stands at 3.59 for the year which is also a similar improvement in fact a bigger improvement of about 73 basis points over last year.
— P. Sitaram
This includes the impact of the entire ammonization that we have taken for family pension up to Rs.66 Crores.
— P. Sitaram
It includes the impact of that interest on refund.
— P. Sitaram
As I mentioned it includes the impact of the onetime write off on family pension benefit.
— P. Sitaram
How one should see this number because I believe still there has been a Q-o-Q stability in the loan book so why there is a decline or reversal in the standard assets on the provisioning part?
— Bunty Chawla
The decline in the stand asset provision as I mentioned we held COVID provisions in the slide that which we gave.
— P. Sitaram
We did utilize those provisions as and when the stress came whether from COVID or from other sources.
— P. Sitaram
Over and above that we had made certain additional provisions which are cautious again it starts off with the RBI circular so the first one that we had made 116 Crores was what based on that RBI circular but we continued to add to that on a voluntary basis which are related to about 833 Crores.
— P. Sitaram
Yes, that is the utilization of DTA, now DTA there is a slightly complex formula some part of it is reduced from tier one and some is left as residual as a risk weighted asset at about whatever that 625% or 325%.
— P. Sitaram
So I do not see much stress in that, but yes that is why despite the fact that my quarter four slippage if you see has come down quite substantially but I am keeping my slippage ratio conservatively at 2.5% but it is likely to be much below.
— Rakesh Sharma
On NIM right, so we have mentioned the margins, but somehow on quarterly basis it becomes very volatile because of the NPA recovery that we include here in NIM, NII right.
— Jay Mundra
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Q&A — 5 exchanges
Q
Thank you for the opportunity. Sir one question largely on the recoveries front so given that the momentum has been strong on the recovery front so any guidance what we are expecting recoveries for FY2023?
Rakesh Sharma
Now this like last year as you know we had made a target of Rs.4000 Crores. As against that we have been able to recover Rs.5320 Crores so this Rs.5320 Crores includes everything recovery in cash and then recovery in PW account and some part which has gone to interest so this year again because now most of the big accounts mostly have been settled, there are small accounts are there, but still we are expecting total recovery of Rs.4000 Crores during 2022-2023. Got it and probably Sir this might even break on the higher side but chances of breaking on the lower side is less right? Yes. It can e
Q
Thank you Sir. Thank you for giving the opportunity? Just one query as we see the provisioning and line item as we have shared on the slide #13 so it seems there has been a high depreciation on the investment part and we go a reversal in the provisioning on the NPA as well as the standard assets? How one should see this number because I believe still there has been a Q-o-Q stability in the loan book so why there is a decline or reversal in the standard assets on the provisioning part?
P. Sitaram
The decline in the stand asset provision as I mentioned we held COVID provisions in the slide that which we gave. We did utilize those provisions as and when the stress came whether from COVID or from other sources. We continued to make provision from that directly charging it to PL. So this from March now we have taken a recording now that in terms of the RBI circular has also the status of the COVID. We have retained that extra provision that we had made up about 116 Crores and the remaining thing is what we have taken back to PL that is why you will see some amount of credit on the provisio
Q
Hi! Thanks a lot Sir. Sir, just a query, so in your slippages data or in the movement of asset quality data you have said that there is a 160 Crores write-off, but in provisions data the bad debts written-off is 529 Crores. So can you just reconcile two because I think that the bad debts written-off provisions should be less than the loans written-off during the quarter, so is there something else there.
P. Sitaram
This 160 is for the quarter four. Right. As against 160 you are referring to our PL. Correct in the provisions, in the PL, the bad debts written-off provisions is higher number. It is around 529 Crores for quarter ended March 2022 on slide I think page #13 or slide #14. Yes, so that 529 write-off change that includes settlements so that is technically is not a write-off. So what we do voluntarily is what we are shown as write-off in the NPA moment, but in terms of accounting even if the 100% provided case I recover something what I do is I have to show on gross basis that the entire principle
Q
Good evening Sir, I have couple of questions one is on your write-off policy so we have 22500 Crores of loss assets which are 100% provided and this of course moves the reported write-off as a much higher number and in this quarter we have done a very miniscule write- off. So wanted to check what is the write-off policy these assets are already loss assets 100% provided so what stops you from writing-off these assets and bringing down your GNPA and what is your thought process there.
P. Sitaram
The thought there is that we are carrying certain amount of deferred tax asset which is significant and the component there of course the larger component is towards the provision, but we also have business loss there. So any technical write-off that we do will move the deferred tax asset from the provision to the business loss category. As you know that the business loss category has a limited life whereas the provision has got an unlimited life. So any call that we take here will have an effect on the average life of that to utilize this asset. So that is the main consideration which is ther
Q
Thank you very much ladies and gentlemen for attending this conference. After this also if you have any questions, the entire top management and the CFO will be available for answering any specific queries or any other questions. So thank you very much for attending this conference and thanks ICICI Securities for arranging this conference.
Management
Speaking time
P. Sitaram
24
Jay Mundra
24
Rakesh Sharma
23
Chintan Shah
10
Moderator
7
Pranav Tendulkar
7
Bunty Chawla
3
Divya Purohit
1
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Opening remarks
Divya Purohit
Good evening and welcome everyone. On behalf of ICICI Securities, I welcome you all to IDBI Bank cumulative results call. Today from the management, we have with us Shri Rakesh Sharma, Managing Director and CEO, Shri J Samuel Joseph, Deputy Managing Director, Shri Suresh Khatanhar, Deputy Managing Director, Shri P. Sitaram, Executive Director, and Chief Financial Officer. Thank you and over to you Sir.
Rakesh Sharma
Thank you Madam and good evening ladies and gentlemen and welcome to the IDBI Bank Q4 financial year FY2022 and financial year ended March 31, 2022, conference call. I am Rakesh Sharma here. Just to begin with of course the detailed presentation will be made by our CFO Mr. Sitaram. Just want to say some few words. One is that the last two years was affected by COVID as all of us know and as far as IDBI Bank specifically is concerned from May 2017 it was placed under PCA and that PCA was lifted in March in 2021 so that way this last year was the first year when we were out of PCA and though the first half was affected by COVID also that is why performance was affected to some extent, but today when we are out of PCA and we are discussing about the financial results for FY2021- FY2022, I am happy to say that the bank has achieved the turnaround and now the turnaround has really happened. During this four years period when we were under PCA, we have taken lot of measures both financial an
P. Sitaram
Good afternoon everyone. If we go to slide #5, the major highlights for the financial year. The profit after tax has improved by 79% to Rs.2439 Crores. Operating profit has increased by 7% to Rs.7495 Crores. NII has also improved by 7% to Rs.9162 Crores. NIM has improved by 35 basis points to 3.73 and if we exclude the impact of this interest on income tax defer the NIM stands at 3.59 for the year which is also a similar improvement in fact a bigger improvement of about 73 basis points over last year. The ROA has gone up to 0.84 and the ROE stands at 13.6. Overall the cost to income is at 45.89. This includes the impact of the entire ammonization that we have taken for family pension up to Rs.66 Crores. If we had restricted ourselves to only the period charge then it would have been lower to about 43%. The capital adequacy is already mentioned is quite comfortable and RWA is controlled. In fact there is a marginal reduction. Overall it stands at about Rs.1,54,000 Crores. Cost of deposi
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