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Higher depreciation hit IDBI Bank's profits - Views on News from Equitymaster
 
 
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  • Jan 30, 2001

    Higher depreciation hit IDBI Bank's profits

    IDBI Bank reported a growth of 23% in operating profits for the quarter ended December 2000. However, higher depreciation and provisions led to a decline of 49% in net profits.

    (Rs m) 3QFY00 3QFY01 Change
    Interest Income 1,098 1,391 26.6%
    Other Income 137 176 28.1%
    Interest Expenditure 883 1,126 27.5%
    Operating Profit (EBDIT) 216 265 22.8%
    Operating Profit Margin (%) 19.6% 19.1%  
    Other Expenditure 116 189 62.7%
    Depreciation 28 75 163.0%
    Profit before Tax 208 177 -15.1%
    Provisions & Contingencies 0 70  
    Tax 64 33 -47.6%
    Profit after Tax/(Loss) 145 74 -48.8%
    Net profit margin (%) 13.2% 5.3%  
    No. of Shares (eoy) 140 140  
    Diluted Earnings per share* 4.1 2.1  
    P/E (at current price) 6.8 13.2  
    *(annualised)      

    The bank's deposits and advances increased by 22% and 17% respectively for the nine months ended FY01. Credit to deposit ratio however, declined to 43% (from 45%) during the same period.

    Depreciation charge of the bank grew by more than 160% during the quarter. This was due to higher rate of (33.3%) depreciation on computers as per the RBI's recent guidelines. This resulted in an additional charge of Rs 42.8 m for the quarter.

    At the current market price of Rs 28, IDBI Bank is trading at 13 times its 3QFY01 annualised earnings. Its Price/Book value ratio of 1.5 times is comparatively lower than other private sector banks.

     

     

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