IDBI Bank Posts Modest Profit Growth in Q3 FY2026
IDBI Bank has announced its financial results for the quarter ended December 31, 2025. The bank reported a net profit of Rs 1,935.5 crore. This figure represents a slight increase of 1.4% compared to the Rs 1,908.3 crore earned in the same period last year. The growth in profit came primarily from provision write-backs and improvements in asset quality.
Core Income Declines Sharply
Despite the profit rise, the bank faced a significant challenge with its core income. Net interest income fell sharply by 24.1% year-on-year to Rs 3,209.4 crore. This decline reflects lower interest earned and higher funding costs. Interest earned dropped to Rs 7,073.6 crore from Rs 7,815.6 crore a year ago. At the same time, interest expended rose to Rs 3,864.1 crore from Rs 3,587.4 crore. Sequentially, net interest income slipped by 2.3%.
The drop in core income had an immediate impact on the market. Shares of IDBI Bank fell nearly 6% following the announcement. Investors reacted negatively to the sharp decline in net interest income.
Balance Sheet Shows Growth
On the balance sheet front, IDBI Bank recorded positive growth. Deposits increased by 9% year-on-year to Rs 3.08 lakh crore. Advances grew even more robustly by 15.5% to Rs 2.39 lakh crore. This expansion indicates the bank's active lending and deposit-gathering activities.
Other Income and Expenses
Other income provided a significant buffer to the bank's earnings. It rose by 61.3% to Rs 1,208.9 crore from Rs 749.4 crore a year earlier. This increase helped offset some of the pressure from the falling net interest income.
Operating expenses, however, increased by 15% to Rs 2,501 crore. The rise was driven mainly by higher employee costs. Managing expenses remains a key focus for the bank.
Provisions and Asset Quality
IDBI Bank reported a provision write-back of Rs 541.6 crore in the quarter. This contrasts with a provision expense of Rs 165.6 crore in the year-ago period. Specifically, provisions for non-performing assets saw a reversal of Rs 603.4 crore. Tax expense declined by 28.1% to Rs 523.4 crore.
Asset quality showed clear improvement. Gross NPAs declined to Rs 6,280.9 crore, or 2.57% of advances. This is down from Rs 7,634.8 crore, or 3.57%, a year earlier. The net NPA ratio stood at 0.18%, unchanged from a year ago. These figures indicate a healthier loan book.
Capital and Margins
The capital adequacy ratio under Basel III stood at 24.63%. The Common Equity Tier 1 ratio was 23.53%. Both ratios reflect a strong capital position. However, the net interest margin narrowed to 3.52% from 5.17% a year earlier. This compression highlights the pressure on profitability from funding costs.
Overall, IDBI Bank's Q3 results present a mixed picture. Profit growth is modest, supported by write-backs and better asset quality. Yet, the sharp fall in core income and margin compression pose challenges. The bank must navigate these issues to sustain performance in the coming quarters.
