The Hindu Business Line : IOB’s profit up 25% on growth in core income

Chennai, Jan. 30 Indian Overseas Bank (IOB) has reported a net profit of Rs 308.14 crore for the third quarter of the year compared with Rs 246.78 crore in the corresponding period of last year, a growth of 25 per cent. The profits came essentially from core operations—income from treasury operations, which was lower in Q3 last year.

For the first nine months of the current year, the bank made a net profit of Rs 896 crore against Rs 718 crore in the same period last year.

Overseas offices

At a press conference here today, the Bank Chairman and Managing Director, Mr S A Bhat, said that there was good money to be made from overseas operations. Towards this end, the bank intends to open representative offices in Dubai and Ho Chi Minh city in Vietnam and a branch in New Zealand. He expects overseas operations to account for 10 per cent of profits by next year, from about half of that now.

IT hive off

The bank intends to hive off its IT division into a wholly owned subsidiary, with a view to making a business out of its in-house software capabilities. The bank today runs on its own core banking solutions software, which, according to Mr Bhat, is much cheaper than other products in the market.

Mr Bhat further said that the bank had set up a ‘syndicate desk’ about a month ago. This desk would proactively get big ticket loan accounts from customers and syndicate the loan among other banks. In the process, the bank would get a syndication fee, which, for the next full year, should work out to about Rs 15 crore.

‘Wait for Q4’

On the dip in income from treasury operations, Mr Bhat said, “wait and see the fourth quarter”. The bank, he said, liquidated a chunk of its securities in the past few weeks, taking advantage of the good prices for the bonds. He said that the bank had an equity portfolio of about Rs 450 crore, on which it has made good profits. Mr Bhat, like most other bankers, feels that interest rates would dip from early next year.