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Updated: January 31, 2013 03:18 IST

Marginal rise in IOB’s profit

Special Correspondent
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M. Narendra
M. Narendra

Indian Overseas Bank has reported a 7.60 per cent rise in its net profit at Rs. 116.50 crore in the third quarter ended December 31, 2012, against Rs. 108.27 crore in the same period in the previous year. Total income for the third quarter rose by 16.8 per cent to Rs. 5,846.98 crore from Rs. 5,007.14 crore in the year-ago period.

Addressing presspersons here on Wednesday, M. Narendra, Chairman and Managing Director, said interest income rose by 16.04 per cent to Rs. 5,333.14 crore from Rs. 4,596.08 crore while non-interest income registered a growth of 25 per cent to Rs. 513.84 crore from Rs. 411.06 crore. Mr. Narendra said the sequential growth in net interest margin to 2.51 per cent from 2.33 per cent in the second quarter was due to a reduction in bulk deposits carrying higher interest rates. Also, the cost of deposits had come down to 7.58 per cent from 7.68 per cent. “We have a substantial bulk deposits carrying high cost due for maturity this quarter and the re-pricing or replacement with low cost retail deposits will add to the net interest margins in the current quarter,” he said.

Even though there was pressure on CDR (corporate debt restructuring) with quite a lot of reversal of interest charges, the asset liability management was good with efficient management of funds, he said. The small increase in net profit was due to higher provisioning against non-performing assets, provisioning against restructured accounts and higher amount set aside towards tax. The net non-performing assets (NPA) were higher at 2.33 per cent during the quarter under reference against 1.23 per cent in the year-ago period. However, the slippages in the restructured categories were minimal, Mr. Narendra said.

The total business of the bank registered a growth of 14.57 per cent to Rs. 3,43,186 crore as on December 31, 2012 from Rs. 2,99,555 crore as on December 31, 2011. Deposits grew by 11.12 per cent to Rs. 1,85,573 crore from Rs. 1,67,006 crore and advances by 18.91 per cent to Rs. 1,57,613 crore from Rs. 1,32,549 crore. The capital adequacy ratio was 11.65 per cent as per Basel II norms. Mr. Narendra said the bank’s board of directors has approved the issue of shares at a premium on a preferential basis to the Government of India and LIC of India (under its various schemes) up to an amount of Rs. 1,542 crore (including premium).

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