The Hindu Business Line : IOB changes tack; eyes Rs 1 lakh cr biz

BUOYED by its substantially improved financial performance in the last four years, Indian Overseas Bank (IOB) has changed its strategy and set its eye on taking its balance sheet size to a whopping Rs 1-lakh crore by March 2007 from the existing level of Rs 63,000 crore.

The Chennai-based public sector banking major expects to reach a size of Rs 74,000 crore by the fiscal-end and Rs 85,000 crore by March 2006. The bank is not averse to inorganic growth with the help of takeovers and acquisitions, the IOB Chairman and Managing Director, Mr S.C. Gupta, announced here on Thursday.

This assumes significance since the bank had sometime back announced that it had consciously evolved a strategy of focussing its energies on building up quality assets (advances) instead of wasting capabilities on the exercise of increasing its deposits (liabilities) in view of absence of lucrative avenues for deploying the low-cost funds.

Indicating a major shift in the strategy, Mr Gupta told newspersons the bank was now eyeing the Rs 1-lakh crore-mark business. On inorganic growth, he said though not averse, the bank was not actively pursuing this path and has not shortlisted any target banks for acquisitions.

"If something very exciting is available, we will be keen to acquire such an entity. We do not have any such entity in our mind now. But, you never know, sometimes developments do take place and exciting offers might be available," Mr Gupta, who is due to retire in 2007, said.

From a net profit of Rs 40 crore in 2000, the bank has improved its net profit improved to Rs 513 crore by March 2004. The operating profit has improved from Rs 188 crore to Rs 1,325 crore during the same period. The balance sheet has grown from Rs 32,000 crore to Rs 63,000 crore.

Mr Gupta attributed the success in doubling the balance sheet size and other financial parameters mainly to low cost of funds, effective management of funds, month-to-month targets, improve productivity and significantly improved standards assets position.

Mr Gupta said the gross NPAs that were above 13 per cent in 1999 have come down to 6.5 per cent by June 2004.