The Hindu Business Line : IOB to open office in China by December

INDIAN Overseas Bank is looking at opening a representative office in China as part of its plans to expand internationally. The proposals being weighed by the bank include setting up of operations in Canada and Malaysia.

According to Mr S.C. Gupta, CMD, the bank has received RBI approval for its China venture and hopes to set up a base in the country by December.

The plan is subject to clearance from the Chinese authorities.

"We are trying to enter more promising markets. A full branch is being contemplated in Canada and a representative office will be set up in Malaysia. These will complement some of our recent efforts, which included the opening of a foreign exchange remittance centre in Singapore," he told presspersons here on Monday.

The bank, present in five overseas centres, has set a $13-million operating profit target for the current year from global business.

The last fiscal saw IOB clock an operating profit of $10.85 million from its international operations. Incidentally, its net overseas NPAs stand at 0.89 per cent, accounted for by its Singapore unit alone.

The other four units — two in Hong Kong and one each in Korea and Sri Lanka — have no NPAs. Global net advances stood at Rs 20,295 crore in March 2004.

Mr Gupta also observed that IOB wished to bring down its NPAs drastically over the next few years. Net NPAs have already come down to 2.85 per cent.

Its target for March 2006 has been set at 0.5 per cent. IOB also hopes to attain a zero-NPA status by September 2006.

The bank's net profit has increased from Rs 416 crore in 2002-03 to Rs 513 crore in 2003-04.

"We have set an overall growth target of about 17 per cent this year," he said, adding that the bank will implement sensible lending, recovery and risk management policies in the coming days.

On another front, IOB will stress on retail lending, especially in terms of increasing its housing loans portfolio. Lending more to SMEs will also be among its objectives this year.

The bank, which claims to have an adequate equity base, now plans to raise Rs 200 crore in Tier II capital. This will be done by September 30.

Its total deposits moved up from Rs 36,699 crore in March 2003 to Rs 41,483 crore in March 2004. IOB will soon begin to implement its core banking solution; the exercise will be flagged off in Chennai.