IOB Q1 net more than doubles to ₹327 crore

Public sector lender Indian Overseas Bank’s (IOB) standalone net profit for Q1 of FY22 has more than doubled to ₹327 crore on account of a rise in other income and cash recovery.

“We have been doing well in all the key parameters for the last few quarters,” said We have written to RBI requesting us to take us out of Prompt Corrective Action (PCA) and awaiting their response,” said P.P. Sengupta, MD & CEO.

Going forward, IOB will be focusing on recovery, low-cost deposits and less capital- consuming advances. For FY22, it has targeted to recover ₹4,500 crore. In Q1, cash recovery stood at ₹1,100 crore against the target of ₹860 crore.

IOB said it had evolved a policy of not taking fresh exposures in stressed sectors, below hurdle-rated accounts and BB and below rated accounts. It also exited from accounts in the stressed sectors to improve asset quality.

During Q1, total income contracted by ₹79 crore to ₹5,155 crore, interest income declined by ₹239 crore to ₹4,063 crore, while non-interest income grew to ₹1,092 crore from ₹932 crore due to rise in other income. Net interest margin declined to 2.34% from 2.36%. Gross deposits rose to ₹2,42,941 crore from ₹2,25,546 crore and gross advances to ₹1,38,944 from ₹1,31,565 crore.

Gross non-performing assets declined to 11.48% from 13.90% (in absolute terms to ₹15,952 crore from ₹18,291 crore) while net NPAs declined to 3.15% (₹3,998 crore) from 5.10% (₹6,081 crore).

Provisions and contingencies contracted to ₹868 crore from ₹970 crore. Provision coverage ratio improved to 91.56% from 87.97%. “Our provision coverage is very good, and we are hoping to bring down Gross NPA to 10% or below,” he said.

IOB said that it was holding a total provision of ₹17,776 crore under the provisions of IBC, (98.74% of total outstanding). Moreover, it had an exposure of ₹628.11 crore with two borrower accounts belonging to the same group.

During the quarter, IOB reported 17 fraud cases involving ₹115.42 crore for which it is holding 100% provision.

Malaysian JV

IOB has decided to hive off its 35% stake in India International Bank, Malaysia and has offered it to the Union Bank of India.

India International Bank is a three-way JV between Bank of Baroda (40%), IOB (35%) and Andhra Bank (25%). Last year, Andhra Bank was merged with Union Bank of India.

“We have asked Union Bank of India to buy our stakes. The valuation exercise is going on,” he said adding that it was originally decided by IOB to exit the Malaysian JV as part of its plan to come out of RBI’s Prompt and Corrective Action (PCA) and it continues

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Printable version | Sep 22, 2021 9:24:09 PM |

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