IDBI Bank’s reported second-quarter profit fell 39% after a one-off gain last year, but underlying earnings, net interest income and margins improved as Fairfax’s proposed Rs 52,878 crore takeover moved closer to completion.
IDBI Bank reported a sharp fall in second-quarter profit, but the headline drop masked an underlying improvement in its core lending business. The lender said net profit fell 39% from a year earlier to Rs 2,205 crore in the September quarter, compared with Rs 3,627 crore a year ago, when earnings were boosted by a one-time gain from the strategic sale of NSDL. Excluding that exceptional item, profit rose 14% year on year, according to Business Today.
The bank’s net interest income, or the gap between what it earns on loans and pays on deposits, climbed 29% to Rs 4,228 crore. Net interest margin, a key measure of profitability in banking, improved to 4.11%, up 40 basis points from a year earlier and 50 basis points from the June quarter. IDBI Bank also said its gross non-performing assets, which track bad loans as a share of total advances, eased to 2.12%, while the cost-to-income ratio stood at 48.17%. Return on assets came in at 1.83%, reflecting a stronger operating performance even as reported profit was lower.
The results came in the same week that the Cabinet Committee on Economic Affairs approved the long-awaited sale of a 60.72% stake in IDBI Bank to a Fairfax Financial Holdings-backed vehicle for Rs 52,878.08 crore. The transaction covers the Government of India’s 30.48% holding and Life Insurance Corporation of India’s 30.24% stake. After the deal closes, the government will retain 15% of the bank and LIC will keep 19%.
The ownership change would mark one of the biggest foreign investments in India’s banking sector, according to reporting by Livemint and other publications. Fairfax, led by investor Prem Watsa, is expected to bring fresh capital and may support lending growth, particularly to smaller businesses, although the transaction still needs regulatory approvals and completion of the open offer process. Analysts and market reports have described the move as a strategic restructuring that could reshape the lender’s future direction.
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