Indian Overseas Bank reported a higher net profit for the July-September quarter of the current year, thanks to higher recoveries from ‘written-off accounts and undebited interest.'

The bank's net profit for the period was higher by Rs 1.31 crore. Even this would not have been possible but for the recoveries.

Recoveries from the written-off accounts, which add to the net profit, amounted to Rs 238 crore in the first six months, of which, Rs 106 crore came in the second quarter. Comparatively, the bank recovered Rs 128 crore in the entire first half of last year.

Non-interest income also contributed to the profits for the quarter. This amounted to Rs 427 crore, against Rs 274 crore previously.

This would suggest that the bank achieved nothing from its core operations (lending), but that is not quite true. The bank indeed earned 32 per cent more in terms of net interest income, but the gains here were taken away by provisions . Some of the constituents of the provisions showed sharp increase. For example, ‘provision on restructured accounts' rose to Rs 26.30 crore, compared with Rs 5.98 crore in the corresponding quarter of last year. Similarly, provision for standard assets rose to Rs 63 crore, against Rs 30 lakh previously. Outside the NPAs, provision for depreciation of investments rose to Rs 75.37 crore, against Rs 19.79 crore previously.

On the NSE on Friday, the IOB share closed Rs 3.55 higher, at Rs 97.80, which is 80 per cent of the book value.

Slippage

Fresh build up of NPAs in during the quarter amounted to Rs 995 crore, compared with Rs 758 crore previously. However, bank official pointed out that the migration to ‘system generated NPA,' as opposed to manual calculations, contributed Rs 498 crore to the slippage this time.

SB rate hike

At a press conference here today, IOB's Chairman and Managing Director, Mr M. Narendra, spoke of the ‘possibility' of a hike in the rate of savings bank deposits. He however stressed that no decision had been taken.

Related Topics
comment COMMENT NOW