Chillin' out till it needs to be funded
A decade ago when the Universal Bank model was championed (by us, among others) and caught the imagination of banking leaders and adopted globally for a feverish unending good times, IDBI Bank had missed the bus by a whisker as they remained plagued by NPAs and chose to go 100% technology driven in urban centers where ICICI and HDFC Bank were already invested and ramping up. Even now they are plagued by NPAs but the size factor looks much more on IDBI side. Q2 2011 saw them make Rs 4,200 million in profits a 100% growth over last year’s 230 odd crores.
The $100 million quarterly profits and 1400 ATM strong bank can easily lead the new breed of banks this period will spawn with adequate distribution strengths and a more than adequate trust dividend available to it from its customers and a largely surplus word of mouth in its constituency which includes salary account holders, professionals, businesses. The bank in positioning terms seems almost merged with the other midcap going large cap player in ING Vysya Bank and this augurs well for both players.
Till now the bank has been considered part of the pack of public sector banks but that is unlikely to stay easy to maintain going forward, though no longer do they have an option to merge with parent IDBI or otherwise grow there constituency inorganically as larger PSBs come into play and dominate size.
QOQ results are larger by almost 70%. Q11 result was a $60 million which in itself was a 50% over the previous year’s $45million. Advances were a respectable INR1.35T($34bln) as of June and deposits Rs 1.60T($ 40bln) and would have grown in double digits Q-o-Q . ON Total assets of $56bln, returns on assets come to a healthy 1.8% on Quarterly rates of $1.2 bln in Income. NIM has been low becaause of NPA but is steadily improving ( 1.64% as of June) The government is infusing $750 mln as capital in the bank. setting it up for an ipo as that would be up to 25% new issuance if common equity is purchased by the government. IDBI just raised a $100 mln in overnight money out of a target $2bln issuance this year in October in the debt space
The FII investment has been growing steadily in the bank and likely twice the March 2010’s figure of 5.7%