Shares of IDBI Bank hit the upper circuit of 20 percent in the early trade on Monday after the bank posted a profit after 13 straight quarters of net losses. The stock rallied 19.95 percent intra-day to Rs 24.35 on the BSE. In Q4FY20, the bank reported a net profit of Rs 135 crore as against net loss of Rs 4,918 crore in the corresponding period of last year.

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The Life Insurance Corporation of India (LIC) owned IDBI Bank’s net interest margin during the quarter jumped to 3.8 percent as against 2.27 percent, QoQ. Net interest income witnessed a growth 46 percent YoY to Rs 2,356 crore.

Asset quality of the bank improved with gross non-performing assets (GNPA) falling to 47,272.37 crore from Rs 49,502.68 crore, QoQ. GNPA ratio declined to 27.53 percent as against 28.72 percent sequentially. Net NPA ratio also fell to 4.19 percent from 5.25 percent, QoQ.

Slippages fell to Rs 727 crore from Rs 2113 crore, down 65.6 percent, QoQ

As a result of increased recovery from the resolution of bad loans, there was a write-back of Rs 1,511 crore as against the provision of Rs 7,233 crore in the same period last year.

The bank made COVID-19-related provisions of Rs 247 crore during the quarter against standard assets.

In January 2019, LIC completed the acquisition of a 51 percent controlling stake in the lender. The state-run life insurer infused Rs 21,624 crore into the bank.

The bank, which is under the Reserve Bank of India's prompt corrective action (PCA) framework, said it has achieved all PCA parameters for exit except return on asset.

IDBI Bank CEO Rakesh Sharma said that the IDBI Federal Life deal is expected to be closed by September while the approval from Insurance Regulatory and Development Authority (IRDA) will be taken only after the deal is finalised.

The CEO’s statement comes as the deal gained widespread attention following the interest shown by several parties such as Bharti Axa Life Insurance, Kotak Life Insurance, Rakesh Jhunjhunwala’s RARE Enterprises and Kedaara Capital to gain controlling stake last year.

"We expect the IDBI Federal Life Insurance deal to be closed by September this year. We will seek IRDA nod only after the deal is finalized," Sharma said during the bank's earnings concall.

In April, IDBI Bank's board had approved to sell a 23-27 percent stake in its insurance arm IDBI Federal Life Insurance.

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