Chennai-headquartered PSU lender Indian Overseas Bank (IOB) said the bank’s performance continues to improve every quarter and it hopes to build a strong balance sheet in a couple of years in order to reward the shareholders.
“We came out of the RBI’s PCA framework in September 2021 and ever since the bank has been showing progress in its results and, in particular, there has been good progress on the advances front. In another year, IOB will have a much stronger balance sheet and in about two years, IOB will be in a position to wipe out its accumulated losses and will be able to reward the shareholders,” said Partha Pratim Sengupta, MD & CEO of the bank while discussing June 2022 quarter performance.
IOB has reported a 20 per cent increase in its net profit at ₹392 crore for the quarter ended June 30, 2022, compared with ₹327 crore in the year-ago quarter, helped by lower provisions amid a drop in operating profit.
The bank’s operating profit was lower at ₹1,026 crore against ₹1,202 crore in the year-ago quarter due to a market-to-market provision of ₹340 crore on investments.
Total income stood at ₹5,028 crore compared with ₹5,155 crore on the back of a fall in other income, which dropped to ₹593 crore against ₹1,544 crore in Q1 of FY22.
Interest income grew to ₹4,435 crore (₹4063 crore in Q1 of FY22). The net interest margin stood at 2.53 per cent (2.34 per cent).
Total provisions & contingencies were lower at ₹630 crore (₹868 crore). Provisions for NPAs were lower at ₹133 crore (₹1010 crore).
The bank’s slippages were at ₹550 crore in June 2022 quarter. “Slippages have been coming down every quarter. The ratio is 1.6 per cent on an annualised basis. Also, the bank continues to achieve its recovery target of ₹1,000-crore plus recovery per quarter. In June 2022, the bank’s cash recoveries were at more than ₹1,000 crore including upgradations,” he said.
Gross NPA down
For the June 2022 quarter, the gross NPA ratio fell to 9.03 per cent from 11.48 per cent in the year-ago quarter and 9.82 in the preceding quarter. Net NPA at 2.43 per cent was lower as compared to 3.15 per cent in Q1 of FY22 and 2.65 per cent in Q4 of FY22.
Gross Advances increased to ₹1,63,544 crore as of June 30, 2022 (₹1,38,944 crore as of June 30, 2021). The bank has evolved a policy of not taking fresh exposures in stressed sectors below hurdle-rated accounts and BB and below-rated accounts. The bank has also exited from accounts in the stressed sectors.
Total deposits increased to ₹2,60,045 crore as of June 30, 2022 (₹2,42,941 crore as of June 30, 2021).
Sengupta said IOB would raise capital of ₹1,000 crore, primarily through QIP. “We may have to raise capital to sustain growth though the current capital position is comfortable,” he added.