Public sector lender Indian Overseas Bank (IOB), which came out of RBI’s PCA framework last month, continues to maintain its profitable growth curve and is working out mid-term plans for branch-cum-manpower expansion

“Since the bank is now allowed to resume its expansion activities, IOB is likely to hire 100 officers and 70 clerks. We are redrawing our manpower policy based on the digitalisation policy. The bank may open 30-40 new branches next fiscal even as we would continue with branch rationalisation exercise. We will come out with our mid-term plan soon,” said Partha Pratim Sengupta, MD & CEO of the bank.

Doubled net profit

Meanwhile, the bank more than doubled its net profit to ₹376 crore for the quarter ended September 30 against ₹148 crore in the same period a year ago, helped by lower provisions.

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The bank’s operating profit grew 5 per cent to ₹1,419 crore against ₹1,346 crore on account of reduction in interest expenditure and higher non-interest income.

Falling interest income

Total income stood at ₹5,376 crore against to ₹5,431 crore. Interest income fell to ₹4,254 crore from ₹4,363 crore while non-interest income was higher at ₹1,121 crore (₹1,068 crore). Net interest margin was lower at 2.43 per cent (2.57 per cent).

“The industry has become more competitive. Almost all bigger banks have reduced their interest rates. So, in this competitive scenario, we need to match the same level. However, our strategy will now be to boost other income to make up for the above,” said Sengupta.

Lower provisions

Total provisions were lower at ₹1,036 crore (₹1,193 crore). Slippages were at about ₹1,400 crore, of which three accounts — including an NBFC — contributed 60–70 per cent.

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“These three accounts were known to us and booked as NPA two quarters ago. But, because of the stay in the Court none of the banks could do it. The stay was vacated during the September quarter and we have booked it as NPA. It will not impact the balance sheet as we started doing the provisions right from the day, we identified the stress. As on date, we have provided almost 80 per cent for that account,” he added.

Lower NPA ratios

Gross NPA ratio fell to 10.66 per cent from 13.04 per cent in the same quarter a year ago and 11.48 in the preceding quarter. Net NPA ratio stood at 2.77 per cent, down from 4.30 per cent in Q2FY21 and 3.15 per cent in Q1FY22. Its provision coverage ratio improved to 92 per cent from 91.56 per cent in the preceding quarter.

Deposits increased to ₹250,890 crore in Q2FY22 against ₹242,941 crore in the year-ago quarter while gross advances stood at ₹1,46,940 crore (₹1,35,469 crore).

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