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Indian Overseas Bank's profit growth remained flat atRs 205 crore for the first quarter of 2011-12 due to higher provisioning. Higher provisioning was both due to increase in bad debts and new provisioning requirements by the RBI.
Recovery of Rs 93 crore from written-off accounts and Rs 38 crore of un-debited interest contributed to net profits of the bank.
The bank has reported ‘provisioning and contingencies' of Rs 545 crore (Rs 77 crore). About Rs 394 crore had been provided for bad loans. There was a fresh build-up of non-performing loans of Rs 485 crore. IOB also had to provide for ‘counter cyclic buffers' and for ‘standard assets', but the big hit came from provision for diminution in value of investments — Rs 53 crore compared with a write-back of nearly Rs 100 crore, resulting in a negative ‘swing' of Rs 150 crore.
Addressing a press conference here, Mr M. Narendra, Chairman and Managing Director, IOB, said that the bank would try to contain rise in cost of funds by stepping up efforts to secure more low-cost (current account, savings account) deposits. IOB's CASA is currently at 27 per cent and the bank expects to push it to 30 per cent.
The bank hopes to raise its base rate by 50 basis points soon.
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