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Chennai, Oct. 30 Due to a huge increase in provisioning for bad debt — Rs 179 crore during the second quarter of 2008-09 compared with Rs 8.3 crore previously — Indian Overseas Bank posted lower net profit growth at 12.30 per cent, despite a 31.3 per cent increase in operating profit.

Net profit increased to Rs 359.02 crore (Rs 319.7 crore).The higher provisioning was caused, not because of any major delinquency, but due to a change in definition of ‘infrastructure funding’ by the Reserve Bank of India.

Because of this, one corporate account of Rs 100 crore got classified as ‘bad debt’, despite the borrower having been servicing the loan, the IOB’s Chairman and Managing Director, Mr S.A. Bhat, told Business Line.

Operating profits increased to Rs 601.4 crore (Rs 458 crore).

Total non-interest income recorded a year–on-year growth of 23.9 per cent to Rs 216.24 crore from Rs 174.46 crore for the corresponding quarter of 2007-08.

This includes profit of Rs 67 crore from sale of property. CASA (current to saving account) ratio dipped to 29.35 per cent as on 30 September, compared to 30.55 per cent in the year ago period

More Stories on : Financial Performance | Public Sector Banks

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