Public sector lender Indian Overseas Bank (IOB) has more than doubled its profit for the quarter ended December 21, 2021, while its asset quality also improved both year-on-year and sequential basis.
The Chennai-headquartered bank posted a net profit of ₹454 crore as compared to ₹213 crore in the year-ago period, helped by lower provisions despite a drop in operating profit.
The bank’s operating profit fell 12 per cent to ₹1,527 crore as against ₹1,731 crore in the year-ago quarter due to a drop in income.
Total income stood at ₹5,384 crore as compared to ₹5,787 crore. Interest income fell marginally to ₹4,198 crore (₹4,244 crore in Q3 of last fiscal). The net interest margin was lower at 2.40 per cent (2.45 per cent).
Asset quality
Total provisions and contingencies were lower at ₹1,065 crore (₹1,514 crore). But provisions for NPAs were higher at ₹937 crore (₹898 crore). Slippages were at about ₹1,254 crore, of which more than ₹650 crore were pointed out by RBI during their audit. So, in effect only about ₹600 crore slipped (in the agri and retail segments) during the December 2021 quarter.
“The net NPA ratio is gradually coming down and it is 2.63 per cent which I think is pretty good.. Anything below 3 per cent is well accepted. Our domestic NPA has already come down below 10 per cent in the December quarter. But because of the overseas NPAs, which continues to be high at more than 16 per cent, the overall gross NPA is a little above 10 per cent now. We are on track to bring down the gross NPA to a single digit in this quarter,” said Partha Pratim Sengupta, MD and CEO of the bank.
The gross NPA ratio fell to 10.40 per cent from 12.19 per cent in the year-ago quarter and 10.66 in the preceding quarter. Net NPA ratio also declined to 2.63 per cent, down from 3.13 per cent in Q3 of last fiscal and 2.77 per cent in Q2 of this fiscal. Total cash recovery during Q3 was about ₹1,200 crore.
Its provision coverage ratio improved to 92.33 per cent from 92.00 per cent in September 2021 quarter.
Deposits increased to ₹2,47,118 crore in Q3 of this fiscal when compared with ₹234,116 crore in the year-ago quarter, while gross advances stood at ₹1,48,316 crore as compared to ₹1,37,469 crore.
The bank is planning to raise about ₹1,000 crore tier-2 capital during this quarter.