IDBI BANK 2022-23 Annual Report Analysis

Tue, 20 Jun

IDBI BANK has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

IDBI BANK Income Statement Analysis

• Interest income during the year rose 12.4% on a year-on-year (YoY) basis.
• Interest expenses were up by 0.1% YoY during the same period.
• Operating expenses increased by 11.2% YoY during the year.
• The bank's net interest income (NII) increased by 24.7% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 4.4% in FY23 as against 4.2% in FY22.
• Other income declined by 7.0% YoY during the year.
• Net profit for the year increased by 46.3% YoY.
• Net profit margins during the year increased to 18.0% in FY23 from 13.8% in FY22.

IDBI BANK Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	183,158	205,915	12.4%
Other Income	Rs m	49,192	45,754	-7.0%
Interest Expense	Rs m	91,215	91,304	0.1%
Net Interest Income	Rs m	91,942	114,611	24.7%
Operating Expense	Rs m	65,031	72,326	11.2%
Pre-provision Operating Profit	Rs m	76,104	88,039	15.7%
Provisions & Contingencies	Rs m	50,927	51,171	0.5%
Profit before tax	Rs m	25,177	36,868	46.4%
Tax	Rs m	0	0	0.0%
Profit after tax	Rs m	25,337	37,061	46.3%
Minority Interest	Rs m	-234	-219	6.4%
Net Interest Margin	%	4.2	4.4
Net profit margin	%	13.8	18.0

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IDBI BANK Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 2,553.2 bn as compared to Rs 2,328.5 bn in FY22, thereby witnessing an increase of 9.7%.
• Advances for the year stood at Rs 1,625.5 bn as compared to Rs 1,369.6 bn during FY22, a rise of 18.7%.
• Cost of deposits for IDBI BANK fell 8.0% and stood at 3.1%, while yield on advances fell to 8.2%.
• The lender's investments rose to Rs 1,004.1 bn during the year from Rs 834.8 bn in FY22.
• Borrowing stood at Rs 126.4 bn, a fall of 11.9% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 3,315.0 bn as against Rs 3,025.4 bn during FY22, thereby witnessing a rise of 9.6%.

IDBI BANK Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	425,717	463,192	8.8%
Advances	Rs m	1,369,587	1,625,458	18.7%
Deposits	Rs m	2,328,496	2,553,222	9.7%
Yield on advances	%	8.8	8.2
Cost of Deposits	%	3.3	3.1
Investments	Rs m	834,750	1,004,087	20.3%
Borrowings	Rs m	143,450	126,378	-11.9%
Total Assets	Rs m	3,025,396	3,314,977	9.6%

Current Valuations for IDBI BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 3.4, an improvement from the EPS of Rs 2.4 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 54.4, stands at 13.4 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.3 times, while the price to income ratio stands at 2.4 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	17.0	19.2
Earnings per share (Unadj.)	Rs	2.4	3.4
Diluted earnings per share	Rs	2.4	3.4
Avg P/E ratio	Rs	20.9	13.4
Avg P/ABV ratio	Rs	0.8	1.3
Avg Market Cap	Rs	529,825	497,299
Dividends per share (Unadj.)	Rs	0.00	1.00

Ratio Analysis for IDBI BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 63.7x during FY23, from 58.8x during FY22. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 5.79x during FY23, from 5.81x during FY22. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): IDBI BANK's capital adequacy ratio (CAR) was at 20.4% as on 31 March 2023 as compared to 19.1% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 8.0% during FY23, from 6.0% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 1.12% during FY23, from 0.84% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 8.63% during FY23, from 7.04% during FY22. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. IDBI BANK's gross NPA ratio stood at 6.4% as of 31 March 2023 compared to 19.1% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of IDBI BANK was 0.9% in financial year 2023. This compared with 1.3% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	58.8	63.7
Debt to Equity Ratio	x	5.8	5.8
Loans / Deposits	x	0.1	0.0
Capital Adequacy Ratio	%	19.1	20.4
Return on Equity	%	6.0	8.0
Return on Assets	%	0.8	1.1
Return on Capital Employed	%	7.0	8.6
% of Gross NPAs	%	19.1	6.4
% of Net NPAs	%	1.3	0.9
Yield on Advances	x	8.8	8.2
Yield on Investments	x	6.8	6.7

To see how IDBI BANK has performed over the last 5 years, please visit here.

IDBI BANK Share Price Performance

Over the last one year, IDBI BANK share price has moved up from Rs 31.6 to Rs 54.4, registering a gain of Rs 22.8 or around 72.3%.

Meanwhile, the S&P BSE BANKEX is trading at 49,051.8 (down 0.4%). Over the last one year it has moved up from 37,648.3 to 49,051.8, registering a gain of 11,403.5 points (up 30.3%).

Overall, the S&P BSE SENSEX is up 22.3% over the year.

(To know more, you can check out historical annual results for IDBI BANK here and quarterly results for IDBI BANK here)