Infra lender IDFC slumped as much as 7 per cent on Monday before staging a smart recovery. The initial selloff was attributed to the Rs 1,469 crore consolidated loss that IDFC posted in the September quarter. A sharp rise in provisions and reversal of interest eroded IDFC's profitability in the July-September quarter, analysts said.
IDFC said it had created a one-time provision of Rs 2,500 crore from accumulated reserves in order to clean up its books following the demerger of its banking arm - IDFC Bank - from the holding company. IDFC also reversed unrealised interest of Rs 138 crore on stressed assets, which it had booked earlier.
The management, however, pointed that it had guided for the provisions. Bank-related expenses were substantially higher in the first half of the current fiscal year, it added.
"We have been saying in last few quarters that we will make sufficient provisions as we transition to the bank, we have also indicated this (about provisions) in our last quarter conference call... Excluding the one-time provisions, our profit before tax is up 1 per cent," said Vikram Limaye, managing director and CEO of IDFC.
IDFC's expenses related to IDFC Bank was Rs 250 crore in the first half of this fiscal as compared to Rs 38 crore in the same period last fiscal.
Consolidated net interest income (NII) fell 4 per cent annually to Rs 1,058 crore against Rs 1,098 crore last year.
On a standalone basis, the infrastructure finance company posted a net loss of Rs 1,411 crore as against a net profit Rs 470 crore a year ago. Its total income rose to Rs 2,458 crore as against Rs 2,427.27 crore a year earlier.
IDFC shares closed 0.76 per cent lower at Rs 58.4 apiece, compared to 0.19 per cent fall in the broader index.