Shares of IDBI Bank surged nearly 3.20% to ₹56.40 apiece in early-day trade on Tuesday after the bank delivered a strong performance for Q4FY23. The state-owned IDBI Bank on Saturday reported a 64% growth in net profit to ₹1,133 crore in the fourth quarter ended on March 31, 2023, on better interest income.
The bank has achieved a quarterly net profit of over ₹1,000 crore for the first time. Additionally, the net profit has shown a consistent increase over the past seven quarters.
IDBI Bank, for which the government and the LIC have invited bids to sell a majority stake, had a net profit of ₹691 crore in the January-March quarter of FY22.
The bank's net interest income (NII) improved by 35.53% during the fourth quarter of FY23 to ₹3,280 crore, as against ₹2,420 crore in the same period last fiscal. The bank's net interest margin came in at 5.01% in the March quarter, compared to 3.97% in Q4 FY22 and 4.59% in Q3 FY23.
The gross non-performing asset (NPA) ratio improved to 6.38% in Q4 as against 20.16% in the same quarter of last fiscal year. Similarly, net NPAs came down to 0.92% from 1.36% at the end of the fourth quarter of the previous fiscal.
For the full fiscal year of 2022-2023, the bank's net profit grew 49.44% to ₹3,645 crore from ₹2,439 crore in 2021–22. The bank also announced a dividend of Rs. 1 per share, marking the first dividend payout in eight years.
The shares of the bank have been on a bullish trend, having risen by approximately 83% since their 52-week low of ₹30.5 apiece in June last year. Moreover, the stock has delivered an impressive return of 165% over the last three-year period.
Meanwhile, the Reserve Bank of India (RBI) has begun evaluating at least five potential bidders interested in picking up a majority stake in IDBI Bank. Among the list of interested bidders are Kotak Mahindra Bank, Prem Watsa-backed CSB Bank, and Emirates NBD, Reuters reported.
The stake sale in the lender is the first major divestment across state-owned banks as part of a broader privatisation plan and could fetch the government ₹300 billion ($3.66 billion) at the current market valuation, the report said.
The central government owns 45.48% of IDBI Bank and is looking to divest a 30.48% stake in the lender, alongside state-owned Life Insurance Corp of India (LIC), which will sell 30.24% from its 49.24% holding in the bank, according to the report.
As of the end of the March quarter, the government and the Life Insurance Corporation jointly held a majority stake of 94.71% in IDBI Bank. General shareholders, on the other hand, own a 4.9% stake in the bank, while Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) each hold a 0.2% stake.
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