Tag: KPM

IDFC First Bank logs Rs 630 crore loss in Q1 on Covid provisioning, BFSI News, ET BFSI

Banking & Finance

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Private lender IDFC First Bank on Saturday reported a net loss of Rs 630 crore in the April-June quarter due to provisioning measures for cushioning the impact of the second wave of the Covid-19 pandemic. The bank had posted a net profit of Rs 93.55 crore in the year-ago quarter ended in June 2020 and that of Rs 127.81 crore in the previous quarter ended in March 2021.

“Net loss of Rs 630 crore for Q1FY22 is because of prudent provisions for Covid wave 2.0. Covid provision pool increased from Rs 375 crore to Rs 725 crore during the current quarter on a prudent basis to act as a cushion for Covid impact,” IDFC First Bank said in a release.

The bank expects to collect a reasonable proportion of these dues in due course, it added.

Total income (net of interest expense) grew by 36 per cent year-on-year to Rs 3,034 crore in Q1FY22, driven by the growth in NII and fee income, the bank said. Its total income during Q1FY21 stood at Rs 2,229 crore in June 2020 quarter.

The bank said its net interest margin (NIM) — the difference of interest earned and expended — was the highest ever at 5.51 per cent during the reported quarter. The NIM was 4.86 per cent in year ago quarter.

The net interest income (NII) rose by 25 per cent year-on-year to Rs 2,185 crore.

On the asset front, bank’s gross and net non-performing assets (NPAs) were at 4.61 per cent and 2.32 per cent respectively as of June 30, 2021.

The NPA ratios were up from 1.99 per cent and 0.51 per cent respectively, from year ago period.

“The GNPA and NNPA include impact of 84 bps (basis points, which is one hundredth of a percentage) and 71 bps respectively on account of one Mumbai based infra toll account which slipped during the quarter. The bank expects no material economic loss in this account eventually as this is an operating toll road and is only delayed.”

Bank deposits were up by 36 per cent to Rs 84,893 crore. The retail loan book of the lender increased to Rs 72,766 crore as on June 30, 2021 from Rs 56,043 crore.

The year-on-year growth of the retail loan book was 27 per cent excluding Emergency Credit Guarantee Line loan book of Rs 1,645 crore. However, it declined by 1.2 per cent on a sequential basis. The wholesale loan book fell by 15 per cent to Rs 34,232 crore from Rs 40,275 crore.

Capital adequacy ratio stood at 15.56 per cent with CET-1 (common equity tier-1) ratio at 14.86 per cent. Average liquidity coverage ratio (LCR) was at 166 per cent for Q1FY22.

“Within just two years we have made tremendous progress at the bank. Our CASA (current account savings account) ratio is high at 50.86 per cent despite reducing savings account interest rates by 200 bps recently, which points to the trust customers have in our bank and service levels.

“Because of our low cost CASA, we can now participate in prime home loans business, which is a large business opportunity,” V Vaidyanathan, Managing Director and CEO, IDFC First Bank, said. Regarding the loss during the quarter, he said the bank has made prudent provisions for Covid second wave.

“We expect provisions to reduce for the rest of the three quarters in FY22. We guide for achieving pre-Covid level gross and net NPA, with targeted credit loss of only 2 per cent on our retail book by Q4FY 22 and onwards, assuming no further lockdowns,” he said further.



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Central Bank of India to seek shareholders’ nod to set off accumulated loss of Rs 18,724 cr, BFSI News, ET BFSI

Banking & Finance

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State-owned Central Bank of India will seek shareholders‘ approval in its ensuing annual general meeting (AGM) next month to set off accumulated loss of over Rs 18,724 crore from the share premium account of the bank. The next AGM is scheduled for August 10, 2021 through audio/video means.

The bank said it will seek shareholders’ consent to set off the accumulated losses of Rs 18,724.22 crore as on March 31, 2021 by utilising the balance standing to the credit of share premium account of the bank as on date to set off and take the same into account during the current financial year 2021-22.

“The bank is of the view that this it the most practical and economically efficient option available to the bank in the present scenario so as to present a true and fair view of the financial position of the bank,” it said in a regulatory filing.

Central Bank of India said the setting off of accumulated loss would benefit the shareholders of the bank as their holding will yield better value. It will also enable the bank to explore opportunities to the benefit of the shareholders of the bank.

It will also put the bank in a better position to achieve its turnaround plans in time-bound manner, the lender said.

Share premium balance is a reserve that can only be used for the defined purposes.

A share premium account reflects the difference between the face value of shares and the subscription price of the shares.



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HDFC Bank to buy stake worth over Rs 1,906 crore in group’s general insurer from parent, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank on Saturday said its board has given its approval to buy more than 3.55 crore shares in group firm HDFC ERGO General Insurance Company for over Rs 1,906 crore from the parent company Housing Development Finance Corporation (HDFC). “The board of directors of HDFC Bank at its meeting held on June 18, 2021 has approved the purchase of 3,55,67,724 equity shares of Rs 10 each, representing 4.99 per cent of the outstanding issued and paid-up capital of HDFC ERGO General Insurance Company Ltd from HDFC Ltd,” HDFC Bank said in the filing.

HDFC is the promoter and related party of the bank.

The purchase is to happen at a price determined on an independent evaluation report, subject to receipt of necessary approvals including regulatory approvals and approval from shareholders of the bank, it said.

“The aggregate consideration for purchase of 3,55,67,724 shares of HDFC ERGO is Rs 1,906.43 crore, i.e. Rs 536 per share,” it said further.

HDFC ERGO General Insurance had a gross written premium of Rs 12,444 crore for the year ended March 2021. The company’s net worth stood at Rs 2,927 crore.

The private sector general insurer is one of the fastest growing companies among the peers with its gross written premium growing at a 35 per cent compounded annual growth rate (CAGR) over the last 13 years.

“The proposed transaction enables the bank to participate in the growth opportunity of HDFC ERGO and augment HDFC ERGO’s growth prospects leading to long-term value creation by HDFC ERGO to its shareholders,” it said.

The bank has been a distribution partner of the insurer since 2009.

The transaction, indicative to be closed by September this year, will require approval from insurance sector regulator Irdai and banking regulator RBI. Any other necessary regulatory or government approval will be evaluated prior to the share purchase agreement, HDFC Bank said.



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Profit rises 13% to Rs 78 crore, BFSI News, ET BFSI

Banking & Finance

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Private lender DCB Bank on Saturday reported a 13 per cent increase in net profit to Rs 78 crore for the January-March quarter compared to that of Rs 69 crore in the year-ago quarter. Total income of the bank during the January-March quarter of 2020-21 fell to Rs 971 crore from Rs 1,012 crore in the same quarter of 2019-20, DCB Bank said in a regulatory filing. The income from interest as well as from investment fell during the reported quarter from a year ago.

For the FY2020-21, the bank’s net profit remained nearly flat at Rs 336 crore against Rs 338 crore in FY20. Income also was a tad down at Rs 3,917 crore in FY21 against Rs 3,928 crore in FY20.

The bank’s asset quality worsened with the gross non-performing assets (NPAs) spiking to 4.09 per cent of the gross advances as of March 31, 2021, as against 2.46 per cent by the end of March last year.

In value terms, the gross NPAs stood at Rs 1,083.44 crore, significantly higher than Rs 631.51 crore in the year-ago period.

Provisions for bad loans and contingencies in Q4FY21 came down to Rs 101.18 crore from Rs 118.24 crore a year earlier. Net NPAs stood at 2.29 per cent (Rs 594.15 crore) as against 1.16 per cent (Rs 293.51 crore).

On returning the compound interest to eligible borrowers post the Supreme Court final order in March and subsequent the RBI notification, the lender said it is in the process of account by account calculation of interest relief due to the eligible customers.

In the meantime, as of March 31, 2021, the bank has created liability towards estimated interest relief of Rs 10 crore and reduced the same from the interest income.

The bank said it held contingency provision of Rs 229.11 crore against the likely impact of Covid 19 regulatory package, impact of the conclusion of the interim order (of Supreme Court on not declaring accounts as NPAs till August 31, 2020 and after) and other contingencies.

On the impact of second wave of the pandemic, it said under the current circumstances the bank during March quarter, on a prudent basis, has made a contingency provision of Rs 124 crore towards further likely impact of Covid-19 on restructured and stressed assets.

“In addition to this contingency provision of Rs 124 crore, the bank also holds floating provision amounting to Rs 108.80 crore, besides, provisions for standard assets and specific non-performing assets,” it said.

Besides, the amount in overdue categories where the moratorium or deferment was extended as of March 31, 2020 was Rs 1,908.08 crore at end of March this year, it said. The provisions held on these by the end of September 2020 was Rs 68 crore and similar amount was kept as provisions adjusted against slippages (NPA and restructuring), DCB Bank said.

The lender also said that its board has not recommended any dividend for fiscal ended March 2021 in view of the situation developing around Covid-19 in the country and the related uncertainty that it creates.



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Karnataka Bank aims to grow at 12 pc in FY22, BFSI News, ET BFSI

Banking & Finance

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New Delhi, Apr 24 () Karnataka Bank on Saturday said it is targeting to grow its business at 12 per cent to over Rs 1.42 lakh crore in the current fiscal year and will gradually increase the share of retail loan in its portfolio. In a communication to shareholders, the bank said it strives to see 2021-22 as a year of excellence on the back of its healthy business growth, ‘Cost-Lite’ liability portfolio and strengthened fundamentals.

“For the new Financial Year, the Bank is planning to grow its business at a moderate 12 per cent to take the total business turnover (i.e. total of Deposits and Advances) to around Rs 1,42,500 crore,” it said.

As a realignment strategy in its advances portfolio, the private sector lender said it has been eyeing credit exposure of minimum 50 per cent to retail, 35 per cent to mid corporates and not more than 15 per cent to large corporates.

The intent is to minimise the concentration on large corporate borrowers and to ensure continued sustainability, it said.

“The bank has been moving towards the said direction in a sustainable manner. Besides, the yield on the retail and mid corporate advances has been better than the large corporates and also, the risk is widespread across the portfolio than that of concentration in the case of large corporate exposure,” Mahabaleshwara M S, Managing Director & CEO, Karnataka Bank said.

He said COVID-19 came as a challenge in 2020-21 along with the “M-cap related misleading campaign against the private sector banks, including our bank by a section of media”.

Regarding the Supreme Court‘s order on not levying any interest on loans during March-August period of 2020, the lender said it already made ex-gratia payment of difference between compound interest and simple interest for these six months to the eligible borrowers in accordance with RBI directive.

In case of remaining accounts, the penal or compound interest charged on the borrower accounts may have to be refunded and adjusted towards next installment due within a reasonable time from the date of Supreme Court order dated March 23, 2021.

“Further, with the vacation of stay order, NPA marking has also resumed,” it said.

Mahabaleshwara said in spite of turbulent banking environment and unforeseen hurdles, the bank has been able to sail through 2020-21.

On the way forward, he said the bank is striving hard to see Karnataka Bank among the top three in the peer group by focussing on a healthy, consistent, sustainable and remunerative business and by continuing the efforts in recovery process. KPM ANU ANU



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