IDBI Bank Q2 Results: When the stock market opens on Monday, October 19, Dalal Street investors will be particularly focused on IDBI Bank shares. There are two major reasons behind it. The first reason is the results for the September quarter of fiscal 2027, while the second reason is the recently approved acquisition deal worth billions of dollars. On Friday, the bank’s shares rose 0.80 percent or 67 paise to trade at Rs. closed at 84.12. However, the stock has fallen 18.98 percent so far this year. In such a scenario, it will be very important to see how the market reacts to this stock after the quarterly results.

Why did profits fall even after interest income increased?

If we look at the above figures only, the profit of this bank controlled by LIC has come down drastically. IDBI Bank’s standalone net profit for the second quarter ending September 2026 fell 39 percent year-on-year to Rs. 2,205 crores. In the same quarter last year, the bank had Rs. 3,627 crore profit was made.

But the reason behind this decline is not the weakness of the bank’s performance, but the impact of one-time earnings last year. In fact, in the second quarter last year, the bank sold 11.11 percent of its stake in the IPO of National Securities Depository Ltd (NSDL). The bank paid Rs. 799.87 by selling over 2.22 crore shares at Rs. 1,698.96 crore in consolidated profit. This time there was no such additional earnings and the bank’s non-interest income was Rs. 2,489 crores down by 46 percent to Rs. 1,353 crores. Due to this the operating profit of the bank is also Rs. 3,523 crore down to Rs. 2,893 crores.

Asset quality improves as the core business picks up

Apart from the profit figures, if we look at the core business of the bank, there has been a strong growth. The total income of the bank in the September quarter was Rs. 9,594 crore to Rs. 9,865 crores. Interest income Rs. 7,104 crores to Rs. 8,512 crores. Most importantly, the Bank’s Net Interest Income (NII) has increased by 29 percent. It is Rs. 3,285 crores to Rs. 4,228 crores.

Apart from this, the bank has also been successful in reducing its bad loans. The bank’s gross NPAs fell to 2.12 per cent at the end of September 2026, from 2.65 per cent a year ago. At the same time, net NPAs have also come down from 0.21 percent to just 0.17 percent. Over the past few years, the bank’s balance sheet has become fairly clean thanks to capital infusions as well as rapid recovery.

Rs. 52,878 crore worth of Fairfax deal

On October 14, ahead of the quarterly results, the government approved the sale of 60.72 per cent stake in IDBI Bank. Canadian billionaire Prem Vats’ company Fairfax Financial Holdings is going to buy this stake. About Rs. 52,878 crore (about $5.5 billion) in this deal, the central government will take its 30.48 percent stake at about Rs. 26,620 crore will be sold. While LIC has its 30.24 percent stake at approximately Rs. 26,440 crore will be sold.

Fairfax paid Rs per share for the deal. 81, which was fixed by two independent agencies at Rs. 75.99 is higher than the fair value. The disinvestment process, which began in 2022, stalled earlier this year when the initial bid fell short of the government’s reserve price. The deal is now expected to be completed by the end of the current financial year, which will be a major step towards privatization in the Indian banking sector.

On Saturday, the Finance Ministry has also clarified the position regarding this deal. The ministry said that under the IDBI (Repeal) Act, 2003, there is no legal restriction on the government to reduce or sell its stake in the bank. The ministry cited a 2018 decision of the Delhi High Court, which upheld the central government’s right to reduce its stake.