India's state-run IDBI Bank Ltd said it expected a reduction in bad loans this financial year as the economy improves and as the bank steps up recovery efforts, after a surge in sour debt led it to post a $258 million quarterly loss. IDBI also hopes to raise as much as $1 billion during the year to March by selling non-core assets to fund its growth, Chief Executive Kishor Kharat told a news conference on Friday.
The bank made a net loss of 17.36 billion rupees ($258 million) in its fiscal fourth quarter to March 31, compared with a net profit of 5.46 billion rupees a year earlier, IDBI said in a regulatory filing. Its gross bad loan ratio widened to 10.98 percent in March from 8.94 percent a quarter earlier. This was the bank's second straight quarter of losses after a net loss of 21.84 billion rupees in the December quarter. Including IDBI, 11 state-run banks have so far posted combined losses of about $2.5 billion in the March quarter due to a surge in provisions for bad debt after a clean-up ordered by their regulator, Reserve Bank of India. "Now at least we can say the storm is gone," said IDBI's Kharat, adding he expected the bank's bad loans to come down in the next year.
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