Indian Overseas Bank (IOB) has reported a double-digit increase in its net profit in Q3 at ₹555 crore compared with ₹454 crore in the year-ago quarter, helped by lower provisions for NPAs and higher operating profit.

The bank’s operating profit grew in single digits to ₹1,540 crore (₹1,461 crore), mainly due to lower other income. Total income stood at ₹6,006 crore (₹5,317 crore). Interest income was higher at ₹5,056 crore (₹4,198 crore) and the net interest margin came in at 3.27 per cent (2.40 per cent).

Total provisions and contingencies were lower at ₹979 crore (₹999 crore). Provisions for NPAs were significantly lower at ₹711 crore (₹937 crore).

“Slippages were below 1 per cent and they have been under control. We don’t foresee any impact on asset quality going forward,” said Ajay Kumar Srivastava, MD & CEO.

The gross NPA ratio fell to 8.19 per cent from 10.40 per cent in the year-ago quarter and 8.53 in the preceding quarter. The net NPA ratio also declined to 2.43 per cent, down from 2.63 per cent in Q3 FY22 and 2.56 per cent in Q2 FY23. Total cash recovery during Q3 was about ₹1,200 crore.

Srivastava said IOB continued to show improvements in recovery and its cash recovery stood at ₹710 crore, including ₹410 crore from technically written-off accounts (which are estimated at ₹30,000 crore) in the December 2022 quarter.

The bank had set a target to recover about ₹4,500 crore in this fiscal and it has already recovered ₹1,300 crore during the 9 months of this fiscal.

Total deposits increased to ₹257,480 crore in Q3 (₹247,118 crore), while gross advances stood at ₹175,050 crore (₹148,316 crore). The bank has evolved a policy of not looking 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, wherever feasible, it said.

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