Month: October 2021

Bank of Maharashtra Q2 net profit jumps 103% on higher interest income

Banking & Finance

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In the retail loan segment, housing loans grew by 20.35%, while vehicle loans were up 27% compared to a year ago. The earlier stressed MSME too was showing clear signs of cash flow and better capacity utilisation, the CEO said. MSME advances grew 20.66% YoY to Rs 22,995 crore for Q2FY22.

Bank of Maharashtra (BoM) on Thursday reported a 102.71% Y-o-Y rise in its net profit to Rs 264 crore for the September quarter. The net interest margin improved to 3.27% on a Y-o-Y basis against 2.3% in the comparable quarter last year. Net interest income increased by 33.84% to Rs 1,500 crore, compared with Rs 1,120 crore during Q2FY21.

The bank’s net NPA was at 1.73%, while gross NPA came in at 5.56%, as against a net NPA ratio of 3.30% and gross NPA ratio of 8.81% last year. The bank’s provisional coverage ratio improved to 92.38%. It held cumulative Covid-19 provision of Rs 973 crore as on September 30, 2021.

AS Rajeev, CEO, said this was the highest net interest margin reported by the bank in the last five years. Apart from the rise in the net interest margin and net interest income, profits got a boost with Rs 258-crore recovery from the DHFL account and Rs 80 crore from another small account, taking the total recovery to Rs 340 crore. BoM had an exposure of Rs 553 crore to Srei Group which was written off and fully provided for, he said.

Rajeev expects the bank to see a credit growth of around 14-16% for the full year as the economy is opening up. The bank’s strategy of reducing the share of corporate loans and expanding the retail, agriculture and MSME (RAM) segment has paid dividends, with RAM advances growing by 14.4% YoY to Rs 30,4800 crore, he said.

In the retail loan segment, housing loans grew by 20.35%, while vehicle loans were up 27% compared to a year ago. The earlier stressed MSME too was showing clear signs of cash flow and better capacity utilisation, the CEO said. MSME advances grew 20.66% YoY to Rs 22,995 crore for Q2FY22.

The bank plans to raise funds to meet its growth requirements. It raised equity capital of Rs 403.70 crore in the second quarter. It has plans to raise Rs 1,000 crore through tier II bonds.

Total business grew by 13.27% to Rs 296,808 crore. Deposits rose 14.47% to Rs 181,572 crore while gross advances increased 11.44% to Rs 115,235 crore.

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IDBI Bank net profit jumps 75% in Q2 on lower employee costs, higher net interest income

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Slippages amounted to Rs 1,541 crore, down from Rs 1,577 crore in Q1FY22. Recoveries and upgrades were to the tune of Rs 1,910 crore, up from Rs 1,596 crore in the June quarter. The slippage ratio for the year so far stands at 2.2% and the bank intends to contain it at around 3% for the full year.

IDBI Bank on Thursday reported a 75% year-on-year (y-o-y) jump in net profit to Rs 567 crore for the quarter ended September, driven by a reduction in employee costs and an improvement in net interest income (NII).

The bank’s NII, or the difference between interest earned and interest expended, rose 9.45% y-o-y to Rs 1,854 crore.

P Sitaram, chief financial officer, IDBI Bank, explained that the improvement in the bottom line was aided by certain accounting benefits.

“We have seen a reduction in the employee cost. In September 2020, because of the interest rate movement, we had to take an actuarial hit on retirement benefits. This year so far, the movement in interest rates has not given rise to any significant increase in retirement benefits over and above the March 2021 levels,” Sitaram said.

The private lender’s pre-provisioning operating profit rose 15% y-o-y to Rs 1,209 crore. The net interest margin (NIM), a key measure of profitability, stood at 3.02%, down 104 basis points (bps) sequentially.

The lender’s provisions rose 11.6% y-o-y to Rs 434 crore in Q2FY22. Asset-quality performance was a mixed bag as the gross non-performing asset (NPA) ratio improved to 20.92% in Q2FY22 from 21.48% in the previous quarter. The net NPA ratio rose to 1.62% in the September quarter from 1.56% in the June quarter. The provision coverage ratio (PCR) improved to 97.27% as on September 30, 2021, from 95.96% as on September 30, 2020.

Slippages amounted to Rs 1,541 crore, down from Rs 1,577 crore in Q1FY22. Recoveries and upgrades were to the tune of Rs 1,910 crore, up from Rs 1,596 crore in the June quarter. The slippage ratio for the year so far stands at 2.2% and the bank intends to contain it at around 3% for the full year.

The bank’s total deposits fell 0.26% y-o-y to Rs 2.23 lakh crore at the end of September 2021. The value of current account savings account (CASA) with the bank increased 13% y-o-y to Rs 1.22 lakh crore. The share of CASA in total deposits improved to 54.64% as on September 30, 2021, against 48.33% as on September 30, 2020.
Gross advances grew 0.41% y-o-y to Rs 1.64 lakh crore at the end of September 2021. Retail loans accounted for 63% of the total loan book, with the rest being corporate loans.

Shares of IDBI Bank ended at Rs 55.60 on the BSE on Thursday, down 2.03% from their previous close.

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Reserve Bank of India – Tenders

Tenders

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Reserve Bank of India, Thiruvananthapuram had invited e-tender for Design, Supply, Installation, Testing and Commissioning of a Passenger Lift (Capacity – 6 Persons) at Amenities Block at Reserve Bank of India, Thiruvananthapuram, through the RBI Website and MSTC Portal on September 28, 2021.

2. In this context, it is notified that the schedule of events of the tender is modified as under.

Sl. No. Activity Existing Date Revised Date
1 Last date for submitting e-tender in MSTC Portal 14.00 Hrs 21-10-2021 14.00 Hrs 28-10-2021
2 Due date of submission of EMD 13.00 Hrs 21-10-2021 13.00 Hrs 28-10-2021
3 Date & time of opening of Part I of tender 15.00 Hrs 21-10-2021 15.30 Hrs 28-10-2021

General Manager (Officer-in-Charge)

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South Indian Bank posts net loss of ₹187.06 crore in second quarter of FY22

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Thrissur-based South Indian Bank posted a net loss of ₹187.06 crore in the second quarter of FY22 against a net a profit of ₹65.09 crore during the corresponding period of FY21.

The operating profit stood at ₹111.91 crore as against ₹390.94 core for Q2FY21.

As per the RBI direction, provision for depreciation on investments amounting to ₹175.56 crore for Q2FY22 has been shown under “other income” in the profit and loss account, which was originally classified under “provisions and contingencies. Further, amounts recovered from written-off accounts were reclassified under “provisions and contingencies” against previous year classification under “other income”. Excluding these amendments, operating profit would have been ₹346 crore, a press statement said.

The bank has made an additional provision of ₹160 crore which resulted in improved PCR, from 60.11 per cent as on June 30 to 65 per cent as on September 30, 2021. Had this additional provision of ₹160 crore not been provided, the net loss of the bank would be ₹27.06 crore.

NPAs improve

GNPA improved by 137 bps to 6.65 per cent as at September 30 compared to 8.02 per cent as at June 30. CASA ratio improved to 30.8 per cent as at September 30 compared to 27.8 per cent.

According to Murali Ramakrishnan, MD & CEO, the prevailing Covid pandemic scenario impacted the growth in the business and personal loan segment. However, the bank could register reasonable growth in the desired segments like well-rated corporates and gold loan portfolios during the period.

The bank has also been able to meet targeted levels of recovery/upgrades which has helped in containing the GNPA level. The Capital Adequacy Ratio stands comfortable at 15.74 per cent as on September 30, 2021. The bank plans to raise additional capital during FY21-22 to further strengthen the capital base, he added.

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Coverfox reduces monthly net burn by half between April 2020 to March 2021

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After the resignation of Coverfox’s CEO and CTO in early 2020, Sanjib Jha, CEO of Coverfox claims to have reduced the company’s monthly net burn by half from April 2020 to March 2021.

Jha attributed this shift to the company’s increased focus on digital automation. Coverfox started off as a pure call centre selling insurance products assisting the customers to purchase the insurance products. But today, it has pivoted from a call centre heavy burn model to an e-commerce model which is said to have brought over 6x efficiency to the company’s operations.

“We have implemented strategies like a lead scoring system using data analytics to optimise the performance of our call centre and shift to a fully digital journey along with the launch of our B2C mobile application. The use of data and advanced analytics has helped to create a bridge between the behavioural characteristics of customers and their spending habits in insurance buying products, providing a true fodder for machine learning models,” Jha told BusinessLine.

The company’s new B2C app currently has 100K installs and has contributed to an upwards of 1 crore of business in the four months of its launch. He added that, for decades, insurance has been sold as a push product by agents in India. There has been less product knowledge, no transparency, and no proper claim management system.

To address this, Coverfox increased effort on the product side to move to a fully digital sales model which minimises call centre effort. Be it chatbots, Artificial Intelligence (AI) based voice bots, Machine Learning based document scanning, end to end digital flows, lead scoring etc.

Coverfox.com currently has over 3 million monthly visits and plans to expand its catalogue soon to serve a broader audience in need of digital insurance products, particularly bite-sized ones. The company’s services include motor vehicles (both personal and commercial vehicles such as taxi and GCV), health, term life, as focused insurance products.

Revenue and profit

Commenting on the company’s revenue number and profitability, Jha said “We are in structural space and can state that the company is on sound footing now and has achieved gross margin profitability on retail product lines – motor, health and term insurance products.

We have been able to maintain positive gross margins since January 2021, owing to our continuous efforts in optimizing the operations and becoming a customer-focused insurtech.”

Coverfox used to be a prominent player in the insurtech space and had raised capital from marquee investors such as Narayana Murthy’s Catamaran Ventures, SAIF partners, and Accel among others. Coverfox’s direct competitor, PolicyBazaar has recently got the SEBI’s approval for a ₹6,017 Cr IPO and may raise around ₹750 crore through a private placement of equity shares.

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Corrigendum – Supply, Installation, Testing and Commissioning (SITC) of 120 Nos. Sealed Maintenance Free (SMF), Valve regulated Lead Acid batteries (12 V, 150 AH) having Fire retardant casing at Bank’s Office Building at Bandra Kurla Complex in Mumbai

Tenders

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A reference is invited to the event no: RBI/Mumbai/Estate/78/21-22/ET/107 for the captioned tender. In this context, please note the following changes in schedule:

a. Pre–bid meeting : Will be informed in due course
b. Last date of Submission of EMD : November 16, 2021 till 3:00 PM
c. Close Bid date and time : November 16, 2021 till 3:00 PM
d. TOE start time (Opening of Part I – Technical Bid) : November 16, 2021 at 3:30 PM onwards

2. All the other terms and conditions mentioned in the tender remain unchanged.

Regional Director

RBI, Maharashtra & Goa

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Bank of Maharashtra reports 103% jump in Q2 net

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Bank of Maharashtra reported a 103 per cent year-on-year (yoy) jump in second quarter net profit at ₹264 crore against ₹130 crore in the year-ago quarter on the back of robust growth in net interest income and non-interest income.

The Pune-headquartered public sector bank’s bottomline improved despite an increase in its operating expenses and rise in loan loss provisions.

Net interest income (difference between interest earned and interest expended) rose 34 per cent y-o-y in the reporting quarter to ₹1,500 crore (₹1,120 crore in the year-ago quarter).

Non-interest income, comprising fee-based income, treasury income and miscellaneous income, was up 23 per cent y-o-y at ₹493 crore (₹402 crore).

MD & CEO AS Rajeev said the net interest margin (net interest income/average interest earning assets) at 3.27 per cent in the reporting quarter (against 3.05 per cent in the first quarter) is the highest in the last four-five years.

Operating expenses were up about 22 per cent y-o-y at ₹932 crore (₹766 crore). This includes additional liability of ₹217.70 crore due to enhancement in family pension.

Loan loss provisions jumped to ₹583 crore, including towards increase in provisions on account of implementation of resolution plans under RBI’s “Resolution Framework for Covid-19 related stress” against a write-back of ₹4.55 crore in the year-ago quarter.

NPAs decline

Gross non-performing assets (GNPAs) declined by ₹618 crore (net) during the quarter to ₹6,403 crore.

Of the total ₹1,236 crore reduction in GNPAs during the quarter, ₹645 crore was on account of recovery and upgradation. Recovery in written-off accounts includes ₹258 crore from DHFL.

Gross addition in NPAs stood at ₹618 crore, including ₹553 crore on account of fresh slippages.

GNPAs declined to 5.56 per cent of gross advances as at September-end 2021 against 6.35 per cent as at June-end 2021.

Net NPAs position also improved to 1.73 per cent of net advances against 2.22 per cent.

The bank has ₹550 crore exposure to SREI group, and has made full provision towards this exposure. The Kolkata Bench of the National Company Law Tribunal has admitted the RBI’s petitions for insolvency resolution process against Srei Infrastructure Finance (SIFL) and Srei Equipment Finance (SEFL).

Total deposits increased by 14.47 per cent y-o-y to ₹1,81,572 crore. Gross advances rose by 11.44 per cent y-o-y to ₹1,15,235 crore.

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Reserve Bank of India – Press Releases

Press Releases

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Government of India, in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds. The Sovereign Gold Bonds will be issued in four tranches from October 2021 to March 2022 as per the calendar specified below:

S.No. Tranche Date of Subscription Date of Issuance
1. 2021-22 Series VII October 25 – 29, 2021 November 02, 2021
2. 2021-22 Series VIII November 29- December 03, 2021 December 07, 2021
3. 2021-22 Series IX January 10-14, 2022 January 18, 2022
4. 2021-22 Series X February 28- March 04, 2022 March 08, 2022

The Bonds will be sold through Scheduled Commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Limited (CCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited. The features of the Bond are as under:

Sl.No. Item Details
1 Product name Sovereign Gold Bond 2021-22
2 Issuance To be issued by Reserve Bank of India on behalf of the Government of India.
3 Eligibility The Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.
4 Denomination The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
5 Tenor The tenor of the Bond will be for a period of 8 years with exit option after 5th year to be exercised on the next interest payment dates.
6 Minimum size Minimum permissible investment will be 1 gram of gold.
7 Maximum limit The maximum limit of subscription shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the Secondary Market.
8 Joint holder In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.
9 Issue price Price of Bond will be fixed in Indian Rupees on the basis of simple average of closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited for the last 3 working days of the week preceding the subscription period. The issue price of the Gold Bonds will be ₹50 per gram less for those who subscribe online and pay through digital mode.
10 Payment option Payment for the Bonds will be through cash payment (up to a maximum of ₹20,000) or demand draft or cheque or electronic banking.
11 Issuance form The Gold Bonds will be issued as Government of India Stock under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.
12 Redemption price The redemption price will be in Indian Rupees based on simple average of closing price of gold of 999 purity, of previous 3 working days published by IBJA Ltd.
13 Sales channel Bonds will be sold through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), Clearing Corporation of India Ltd. (CCIL), designated post offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
14 Interest rate The investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value.
15 Collateral Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank from time to time.
16 KYC documentation Know-your-customer (KYC) norms will be the same as that for purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required. Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to individuals and other entities.
17 Tax treatment The interest on Gold Bonds shall be taxable as per the provision of Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.
18 Tradability Bonds will be tradable on stock exchanges.
19 SLR eligibility Bonds acquired by the banks through the process of invoking lien/hypothecation/pledge alone, shall be counted towards Statutory Liquidity Ratio.
20 Commission Commission for distribution of the bond shall be paid at the rate of 1% of the total subscription received by the receiving offices and receiving offices shall share at least 50% of the commission so received with the agents or sub agents for the business procured through them.

Ajit Prasad
Director   

Press Release: 2021-2022/1075

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IDBI Bank Q2 results: Net profit up 75%

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IDBI Bank reported a 75 per cent year-on-year (yoy) increase in second quarter standalone net profit at ₹567crore, supported by a huge write-back in provisions for non-performing assets (NPAs) and lower tax expense.

The Bank had posted a net profit of ₹324 crore in the year ago quarter.

Net interest income increased 9 per cent yoy in the reporting quarter to ₹1,854 crore (₹1,694 crore in the year ago quarter).

Other income, including income from non-fund based banking activities such as commission, fees, earnings from foreign exchange and derivative transactions, and profit and loss from sale of investment, declined about 4 per cent yoy at ₹846 crore (₹881 crore).

The received a write-back of ₹1,426 crore in provisions for NPAs against ₹165 crore in the year ago quarter. Tax expense burden was lower at ₹215 crore (₹347 crore).

As at September-end 2021, gross advances barely nudged up to ₹1,64,506 crore (₹1,63,841 crore as at September-end 2020).

Rakesh Sharma, MD & CEO, said the Bank has built up a sanctions pipeline in the mid and large corporate segments and disbursals are expected to pick up from year-end onwards.

The Bank expects to grow its corporate loan book by about ₹6,000 crore in the current financial year.

Samuel Joseph, Deputy Managing Director, said the Bank has an exposure of about ₹400 crore to the SREI group, which is undergoing corporate insolvency resolution process, and has made 100 per cent provision towards this exposure. IDBI Bank recovered ₹196 crore from DHFL.

P Sitaram, CFO, emphasised that the Bank will grow the corporate loan book even as the emphasis will continue to be on structured retail loans.

Gross NPAs declined about ₹1,186 crore during the reporting quarter to ₹34,408 crore.

Gross NPAs as a percentage of gross advances declined to 20.92 per cent against 21.48 per cent in the preceding quarter. Net NPAs, however, nudged up to 1.62 per cent of net advances against 1.56 per cent.

Fresh slippages rose by ₹1,438 crore (₹1,332 crore in the first quarter). The Bank settled NPAs aggregating ₹1,436 crore (₹587 crore).

ends

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ICICI Lombard Q2 net rises 7.4%

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ICICI Lombard General Insurance reported a 7.4 per cent jump in its net profit for the second quarter of the fiscal at ₹446.67 crore. Its net profit was ₹415.74 crore in the same period last fiscal.

“The financials for the current year represent numbers of the merged entity, accordingly the first quarter of 2021-22 has been restated. The comparative numbers for the previous year in the financials pertain to standalone ICICI Lombard and hence are not comparable,” ICICI Lombard General Insurance said in a statement on Thursday.

This follows its acquisition of the non-life insurance business of Bharti AXA General Insurance. On September 3, the firm had announced that it had received regulatory and other approvals from IRDAI for the demerger of general insurance business of Bharti AXA General.

Premium income

For the quarter-ended September 30, 2021, ICICI Lombard posted a 32 per cent increase in its net premium income to ₹3,250.29 crore as against ₹2,462.52 crore in the corresponding quarter in 2020-21.

Net income from investments also soared by 35 per cent on a year-on-year basis to ₹551.75 crore in the second quarter of the fiscal.

Claims paid by the general insurer shot up by 76.6 per cent to ₹2,119.32 crore in the second quarter of the fiscal from ₹1,200.27 crore a year ago.

Claims for the first half of the fiscal include impact of Covid claims on health book of ₹561 crore as against ₹115 crore in the first half of 2020-21 and ₹339 crore in the fiscal year 2020-21, it said in its investor presentation.

Combined ratio stood at 105.3 per cent in the second quarter of the fiscal as against 99.7 per cent a year ago. Solvency ratio stood at 2.49x as at September 30, 2021 as against 2.61x at June 30, 2021.

The board of directors of the company declared an interim dividend of ₹4 per share for the first half of the fiscal year.

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