The Hindu Business Line : IOB net rises 25 pc in Q2

INDIAN Overseas Bank has reported a net profit of Rs 198.49 crore for the quarter ended September 30, 2005, up from Rs 158.33 crore in the same quarter last year, an increase of 25.36 per cent, despite a shortfall of Rs 25 crore in treasury income.

Total income for the quarter increased to Rs 1,250.32 crore (Rs 1,183.25 crore). Net interest income was at Rs 517.3 crore (Rs 465.25 crore).

Other income fell to Rs 174.55 crore (Rs 200.97 crore). This was mainly on account of fall in profits from treasury, which decreased to Rs 69 crore (Rs 95 crore).

Total expenditure was at Rs 866.95 crore (Rs 782.02 crore).

Mr T.S. Narayanasami, Chairman and Managing Director, IOB, said, "Our profits have increased because the core operating profit has increased. We have reduced the cost of expansion in credit and managed NPAs efficiently."

Total deposits were at Rs 47,393 crore and total advances were at Rs 29,328 crore.

Capital adequacy ratio was at 13.65 per cent (13.47 per cent).

The ratio of net non-performing assets to total assets fell to 0.94 per cent (1 per cent).

The bank has improved its net interest margin from 4.05 per cent last year to 4.12 per cent this year, which is one of the highest in the industry, Mr Narayanasami said.

There was pressure on interest margin as the growth in deposit base was less than credit expansion, the chairman said. While there is no plan to hike deposit rates as of now, short term rates on the lending side could see an increase by about 25 basis points, said officials of the bank.

IOB is targeting Rs 1 crore business in this fiscal. In August, the bank opened a representative office in China and will soon be opening another representative office in Malaysia.

Shares of IOB ended today at Rs 89.65 from the previous close of Rs 88.15 on the BSE.

Bharat Overseas IPO

IOB said that its holding in Bharat Overseas Bank, the private sector bank promoted by seven banks, is likely to come down to 18 per cent from 30 per cent when the latter enters the capital market with an initial public offering. The bank is expected to raise Rs 100 crore through this IPO, which is due in a couple of months.

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