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IOB Q2 loss widens on higher bad loans provision

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Net NPAs dip to 9.84% in Sept. quarter

State-owned Indian Overseas Bank’s (IOB) second-quarter net loss widened to ₹2,253.64 crore from ₹487.26 crore last year, due to higher provisions for bad loans.

The Chennai-headquartered bank had made a provision of ₹2,600 crore for bad debts in the second quarter.

Overall provisions increased to ₹2,996.04 crore in the second quarter from ₹2,016.6 crore in the same quarter last year.

IOB, which is under RBI’s Prompt Corrective Action (PCA) measure, said its gross non-performing assets (NPAs) stood at ₹28,673.95 crore at the end of the September quarter, compared to ₹37,109.96 crore in the same period last year.

“The percentage of net NPAs came down to 9.84% in the second quarter from 11.04% in the June quarter,” Karnam Sekar, Managing Director and Chief Executive Officer CEO, Indian Overseas Bank, said in a press conference.

PCA framework

He pointed out that the bank had to bring new NPAs down to 6% to meet one of the criteria to come out of PCA. This means the bank has to reduce the net NPA by ₹4,500 crore, which Mr. Sekar was confident of achieving in the next quarter through a slew of recovery measures.

He also said the other criterion of being profitable, to come out of PCA, would be achieved by March 2020.

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Printable version | Dec 11, 2019 5:10:06 PM | https://www.thehindu.com/business/iob-q2-loss-widens-on-higher-bad-loans-provision/article29881741.ece

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