Indian Overseas Bank hopes to shore up profitability in the current year by reining in fresh slippages, improving its recovery mechanism and reducing non-performing assets, said R Koteeswaran, Managing Director and Chief Executive Officer of the bank.
The bank reported a modest ₹35-crore net profit for the quarter ended March 31, 2015, which is a steep 87 per cent drop from the ₹268 crore in the comparable quarter of the previous year. For fiscal 2014-15 (FY15), it reported a net loss of ₹454 crore as against a net profit of ₹602 crore in the previous year (FY14).
Koteeswaran, who took over the reigns of the bank in December 2014, attributed the dismal show to accumulated NPAs and gloomy economic condition during the year. Operating profit of the bank improved during the fourth quarter of 2014-15 to ₹1,180 crore from ₹726 crore in the corresponding period of the previous year. The net loss is due to higher provisioning and loss of interest on NPAs, he said. The bank has beefed up its recovery mechanism, which resulted in a cash recovery of ₹780 crore in the fourth quarter (₹401 crore in the the year-ago period).
As the bank was in consolidation mode, the credit growth was contained consciously in the backdrop of low credit offtake.
“However, we see a lot of green shoots, which will result in increased upgradation of accounts and also credit offtake,” Koteeswaran said.