IDBI Bank Q2 profit falls 39%; Fairfax stake sale reported

IDBI Bank reported a 39% year-on-year fall in second-quarter FY27 net profit to Rs 2,205 crore, against Rs 3,627 crore a year earlier, putting its earnings in focus ahead of trading on Monday, October 19. Economic Times Markets reported the results, citing an exchange filing, alongside a proposed sale of a controlling stake to Canada's Fairfax Financial Holdings.

The earnings comparison was affected by a Rs 1,699 crore one-off gain in Q2 FY26 from the sale of the bank's strategic investment in NSDL. The bank said that, excluding this gain, Q2 FY27 net profit increased 14% and operating profit rose 59% year-on-year.

Interest-income figures need a closer reading

Net interest income was reported at Rs 1,353 crore, compared with Rs 2,489 crore a year earlier, and was said to have risen 31% sequentially. There is an inconsistency in the reported annual comparison: the article describes a 49% decline, but the two rupee figures imply a fall of approximately 45.6%. The discrepancy remains unresolved.

Net interest margin nevertheless improved to 4.11%, up 50 basis points from the preceding quarter and 40 basis points from a year earlier, according to the reported results.

Deposits and lending expand as bad-loan ratios ease

Total deposits reached Rs 3.55 lakh crore as of September 30, 2026, up 17% from Rs 3.03 lakh crore a year earlier. Current and savings account deposits increased 12% to Rs 1.55 lakh crore, accounting for 43.82% of total deposits.

Net advances grew 18% to Rs 2.71 lakh crore from Rs 2.30 lakh crore. Corporate loans represented 31% of gross advances and retail loans 69%.

The gross non-performing asset ratio declined to 2.12% from 2.65% a year earlier, while the net NPA ratio eased to 0.17% from 0.21%. Provision coverage, including technical write-offs, stood at 99.24%; the bank said this measure had remained above 99% since September 2023.

Fairfax stake purchase reported; completion still ahead

Separately, the report said the Cabinet had approved IDBI Bank's strategic sale and restructuring, with Fairfax selected as the winning bidder for a 60.72% stake valued at Rs 52,878.08 crore. This is a reported transaction, not a completed ownership transfer.

The stake comprises 30.48% held by the Government of India and 30.24% held by LIC. Fairfax's reported offer of Rs 81 per share exceeded an independently determined benchmark of Rs 75.99. An earlier bidding round had failed because offers were below a reserve price of Rs 94.42, after which fresh best-offer bids were invited from qualified bidders.

Following the transaction, the government would retain 15% and LIC 19%, leaving a combined holding of 34%. The report also said the government had authorised the Alternative Mechanism to sell portions of its remaining holding through the open market in future, while LIC would manage its residual stake under regulatory requirements.

The proposed transfer follows a multi-year privatisation process using a two-stage competitive bidding framework. The reported approval and winning bid mark progress towards private control, but do not establish that the acquisition has closed.