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Wednesday, January 30, 2013

Increased income lifts IOB net 7% in Q3

Indian Overseas Bank reported a 7 per cent growth in net profit at Rs 116 crore for the quarter ended December 31, 2012, against Rs 108 crore for the comparable previous year quarter. Net interest income during the quarter went up to Rs 1,381 crore from Rs 1,221 crore last year.

The growth in profit was predominantly attributed to high-cost bulk deposits that matured during the quarter and increased non-interest income. M. Narendra, Chairman and Managing Director of the bank, said the deposit cost had come down substantially as a portion of high-cost bulk deposits matured during the period. According to him, bulk deposits currently stand at 21 per cent as against over 30 per cent last year. Other income grew 25 per cent to Rs 514 crore from Rs 411 crore last year.

Net interest margin stood at 2.51 per cent at the end of the third quarter against 2.61 per cent. The bank has made a provision of Rs 436.37 crore (Rs 252.8 crore). However, in terms of percentage, it is lower at 59 per cent against 72 per cent made in the comparable previous year quarter.

The bank’s gross NPA (non-performing assets) increased to Rs 3,595.14 crore from Rs 1,599.74 crore, a year ago. It recovered Rs 199 crore in third quarter as against Rs 173 crore, a year ago.

Commenting on the trend, Narendra said with more such high-cost bulk deposits are due for retirement in the next quarter and the provisioning too likely to be moderate, “we are likely to post profits as good as last year”. For 2011-12, it reported a profit of Rs 1,050 crore.

He also mentioned that the Government is likely to infuse Rs 1,000 crore as capital. The bank, on the other hand, requires Rs 1,500 crore. To mop up the remaining amount, the bank may consider other options such as rights issue or qualified institutional placement, for which it has already got necessary approvals, he said.


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