Chennai-headquartered Indian Overseas Bank has ushered in the new fiscal by surpassing the ₹5-lakh crore mark in total business for the first time in the year that ended on March 31, 2024. This is a major milestone in IOB’s post-turnaround phase.

“The Bank has achieved a business mix of over ₹5-lakh crore (unaudited), marking a new era of financial growth. From retail to MSME and priority sector, each segment has played a pivotal role in propelling the bank towards this remarkable achievement, according to a source with knowledge of the matter.

The bank management declined to comment on the same citing the ‘silent period.’

The PSU Lender reported a total business of ₹4.5-lakh crore and a net profit of ₹650 crore in FY23.

IOB’s total business crossed ₹2.5-lakh crore mark in 2010-11 and it maintained the growth momentum till FY15 when its total business stood at ₹4.25-lakh crore.

However, the bank’s business started to decline in the following years as it slipped into loss mode due to a massive pile-up of bad loans. The crisis began in 2015-16 when the bank posted a net loss of ₹454 crore after sustaining profitable growth for several years before that.

As a result of the same, RBI put IOB under the PCA (prompt corrective action) programme in September 2015. 

From 2017 onwards, the bank embarked on a multi-pronged strategy and it helped the bank show improvements every quarter.

The Centre had infused equity capital of ₹24,074 crore into the bank during FY2018-FY2022 through recapitalisation bonds, including ₹4,100 crore in the form of zero coupon bonds in March 2021. This enabled the bank to increase its provision cover on legacy stressed assets, while improving its capital ratios above the regulatory levels, and helped it exit the Reserve Bank of India’s prompt corrective action (PCA) framework in September 2021, according to a recent report of rating agency Icra.

In FY21, the bank reported a turnaround with a strong annual net profit of ₹831 crore (as against a loss of ₹8,527 crore in FY20). This came after suffering losses for six years in a row. 

For the quarter ended December 31, 2023, it reported Rs.723 crore net profit. The gross NPA ratio stood at 3.90 per cent and the net NPA stood at 0.62 per cent.

Ajay Kumar Srivastava, MD & CEO of the IOB had indicated that IOB would strive to maintain net NPA below 1% in the coming quarters also.

“With legacy NPAs largely provided for, the profitability will improve on the back of low credit costs resulting from better asset quality, added Icra

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