The Hindu Business Line : IOB posts 25-pc rise in net on higher income

Steady growth: Mr T. S. Narayanasami, CMD, Indian Overseas Bank, and Mr A.V. Dugade, ED, at a press conference in Mumbai on Wednesday. - Shashi Ashiwal

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Mumbai Jan. 24 Strong growth in interest and treasury incomes plus a drop in operating costs have helped Indian Overseas Bank post a 25.13 per cent rise in net profit to Rs 246.78 crore in the third quarter ended December 31, 2006, against Rs 197.21 crore in the period year-ago.

Total income has increased to Rs 1671.69 crore from Rs 1303.31 crore. "Higher operating and net profit is backed by a 45 per cent growth in interest income from core operations," said Mr T.S. Narayanasami, Chairman and Managing Director, Indian Overseas Bank.

Net interest income rose 15.12 per cent to Rs 605.12 crore (Rs 525.64 crore). Non-interest income (other than treasury gains) increased by 26.91 per cent to Rs 157.42 crore. Forex income registered a growth by 33.10 per cent during the quarter while profit on sale of securities rose by 12.97 per cent.

Net interest margin is down at 3.72 per cent against 3.94 per cent on rising deposit costs, said a statement from the bank. Deposits rose 19.84 per cent to Rs 59,200 crore and gross credit by 38.89 per cent to Rs 44,089 crore.

"Credit expansion has been robust and banks cannot keep pace if they rely on CASA (current account and savings account). Growth in volumes in CASA deposits is not very significant," said Mr Narayanasami.

"Business is becoming volume-driven. We are trying to balance and see that NIM does not get distorted. Marginal fall in NIM is in line with the industry," he said.

Cost of deposits rose to 5.34 per cent while the yield on advances climbed to 9.46 per cent (9.08 per cent), said Mr Narayanasami.