IOB net down 53% on loan restructuring

Indian Overseas Bank has reported a 53 per cent decline in net profit for the quarter ended December 31 at Rs 108.27 crore, from Rs 231.66 crore for the comparable previous year quarter. Mr M. Narendra, Chairman and Managing Director of the bank, attributed the drop primarily to restructuring of loans amounting to Rs 3,600 crore (particularly on two major accounts in the telecom tower and power sectors) and the resultant reversal of interest to the tune of Rs 75 crore during the quarter.

However, he said, the bank's focus is currently on improving recovery during the current quarter, which will result in improved performance for the whole of the current financial year. “Overall, for the current financial year we hope to recover Rs 1,500 crore,” he said.

Gross NPA

Mr Narendra pointed out that the bank has brought down its gross NPA (non-performing assets) to 3 per cent as on December 31 from 3.26 per cent a year ago, and the net NPA is at 1.23 per cent for the period under consideration (down from 1.51 per cent). Total deposits grew to Rs 1,67,006 crore from Rs 1,25,062 crore last year. Advances too have gone up from Rs 1,00,129 crore to Rs 1,32,549 crore. Operating profit for the nine-month period grew 34.41 per cent to Rs 2,532 crore from Rs 1,884 crore in the corresponding previous year period.

Gross NPA at the end of the nine-month period is at Rs 3,972 crore, and net NPA is at Rs 1,600 crore. Recovery during the period was at Rs 843 crore. Mr Narendra said, with more sharpened focus on recovery, the bank hopes to keep its gross NPA for the whole of the current financial year below the Rs 4,000-crore mark.

The bank also expects an equity infusion of Rs 1,450 crore from the Government “very soon”, which will take the bank's Tier I capital adequacy ratio to 8 per cent, he said.

Mr Narendra also mentioned that the bank has opened 354 branches during the calendar year 2011, taking the total number of branches to 2,400, and it targets to add another 300 branches during the current year. The total number of ATMs too have gone up to 1,344.

rravikumar@thehindu.co.in