After IOB, RBI may pull up Allahabad Bank, Central Bank of India and Andhra Bank

The Reserve Bank of India may now turn its focus on Allahabad Bank, Central Bank of India and Andhra Bank as their dodgy loans and provision for loan losses are getting precariously close to that of Indian Overseas Bank's -the bank on which the central bank has imposed restrictions on branch expansion.

On Monday, the Chennai-based Indian Overseas Bank had informed the Bombay Stock Exchange that the RBI has initiated a Prompt Corrective Action (PCA) on the bank, which is triggered if bad loans rise above 10 per cent, capital adequacy ratio slips below 9 per cent, and return on assets falls below 0.25 per cent.

According to a report by Asian Markets Securities, in case of some public sector banks, the gross impaired loans -which includes gross non-performing assets and gross restructured loans -have crossed 15 per cent. This comes at a time when demand for credit has dried up and slippages continue to be at an elevated level which in turn could hurt banks' earnings.

The report says that as on March 2014-15, the gross impaired loans of Central Bank was 21.3 per cent, Andhra Bank's was 16.4 per cent, Allahabad Bank's was 16.6 per cent and Punjab National Bank's was 15.9 per cent. During the same period, the provision coverage ratio -the total provisions set aside to write off bad loans -is less than 60 per cent.

Banking experts said the move to impose PCA on Indian Overseas Bank was taken after the RBI inspected the bank and found several irregularities.

The bank cannot open new branches, declare dividend and recruit new employees without RBI's approval.

"However, the regu lator has not placed any restrictions on lending, which means that the regulator is more concerned about the way the bank is run," they added. In a notice to the ex change, the bank has said that "this action will not have any material impact on the growth prospects performance of the bank. The directions given by the RBI are for improving its internal controls and consolidation of its activities".

In the past, the central bank had initiated Prompt Corrective Action on United Bank of India after it came to light that the bank's bad loans were much more than declared.

The restrictions were, however, lifted after two years once its performance improved.



Source : Economic Times

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Indian Overseas Bank shares skid 3% on RBI move

Shares of Indian Overseas Bank fell by nearly 3 per cent following the RBI announcing restrictions on the firm and taking “prompt corrective action” with the view to improve internal processes to deal with mounting non— performing assets.

The stock lost 2.27 per cent to Rs. 36.50 on BSE.

At NSE, shares of the company declined by 2.93 per cent to Rs. 36.35.

“The RBI has initiated a prompt corrective action on the bank and that this action will not have any material impact on the growth prospects or performance of the bank,” IOB had said in a regulatory filing yesterday.

The RBI has specified certain regulatory trigger points, as a part of prompt corrective action (PCA) framework, in terms of three parameters —— capital to risk weighted assets ratio (CRAR), net NPA and Return on Assets (RoA), for initiation of certain structured and discretionary actions in respect of banks hitting such trigger points.

Gross NPA of the bank rose to 9.40 per cent for the quarter ended June 30.

IOB’s gross non—performing assets rose to 8.30 per cent at the end of March 31, from 4.84 per cent a year ago, according to the provisional RBI data taking into account domestic operations of banks.


Source : Thehindubusinessline

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IOB reports Q2 loss at Rs. 245 cr

Indian Overseas Bank today reported a net loss of Rs. 245.51 crore for the second quarter ended September 30 due to higher tax expenses and provisions for bad assets.

The bank had reported net profit of Rs. 132.55 crore during July-September quarter in the previous fiscal.

Total income has increased from Rs. 5,999.75 crore for the quarter ended September 30, 2013 to Rs. 6,440.77 crore for the quarter ended September 30, 2014, it said in a BSE filing.

The bank made provisioning for bad loans to the tune of Rs. 892.38 crore in the second quarter of 2014-15, up from Rs. 619.90 crore in the same period a year ago.

Tax expenses during the quarter under review went up at Rs. 82.57 crore, against Rs. 38.55 crore a year ago.

Also, the asset quality of the bank deteriorated significantly as gross non-performing assets (NPAs) or bad loans rose to 7.35 per cent of total advances, while it was at 4.65 per cent a year ago.

Net NPAs in Q2FY15 also increased to 5.17 per cent from 2.83 per cent a year ago.

Indian Overseas Bank shares traded at Rs. 57.15 per piece on the BSE, down 4.11 per cent from previous close.


Source : The Hindu

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IOB to open 400 more branches this fiscal

Indian Overseas Bank is opening branches in Bangkok and Dubai. The bank Chairman and Managing Director M. Narendra told reporters here on Friday that the bank was in an expansion mode and had set itself the target of opening 400 more branches during the current financial year. At present, the bank has 3,059 branches.

Financial inclusion

“Our focus is on opening more rural branches and taking banking to villages. We have covered 3,000 villages under the financial inclusion scheme. There is a lot to be done on that count. Till now all the banks put together have covered only half of the six lakh villages in the country and there is a huge challenge and an opportunity ahead,” he said. He said the bank’s business — currently at Rs 3,89,000 crore — would cross the Rs 4 lakh-crore mark by the end of the current financial year, “but we have set ourselves a stiff target of Rs 4,25,000 crore.” He said the economic downturn was affecting the performance of banks, and inflation was also a cause for worry.

Narendra said the bank had recently recruited 4,562 employees and 6,500 more would be recruited depending on the expansion plans.

In Andhra Pradesh, the bank has 240 branches and 30 more would be added during the current financial year. “Our expansion will go on at the same pace during 2014-15, and we will add 500 branches all over the country, 50 of them in Andhra Pradesh,” he said.

The gross NPA of the bank stands at 4.65 per cent and net NPA at 2.83 per cent. “We want to bring down the gross NPA to below 3 per cent,” he added.

sarma.rs@thehindu.co.in

Source: thehindubusinessline

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Indian Overseas Bank offers higher NRE term deposit rates

Public sector Indian Overseas Bank has revised its interest rates upwards to 9.50 per cent under NRE Term deposits of 3 years and above with immediate effect.

"Indian Overseas Bank has increased the interest rates under NRE Term Deposits for period of 3 years and above from 9.00 per cent to 9.50 per cent with effect from November 23", a bank statement said.

The revised rates would be valid upto November 30, 2013, the statement added.


Source: thehindubusinessline

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IOB to raise Rs 1,626 cr via preferential shares

The board of directors of Indian Overseas Bank has cleared the bank’s proposal to raise Rs 1,626 crore from the Government and Life Insurance Corporation through preferential allotment of equity shares, the Bank said in a regulatory filing.

IOB will issue equity shares of face value of Rs 10 with premium on preferential basis to the Government and LIC up to an amount of Rs 1,626 crore. It decided to issue perpetual bonds to the extent of Rs 2,497 crore and to authorise its Chairman and Managing Director to fix the size of the issue and finalise the terms and conditions, including fixation of coupon rate depending upon the market conditions.

The chairman may further be authorised to take actions in connection with issue of perpetual bonds, either domestically or overseas, according to the announcement.

The board meeting was held in the wake of the Government’s decision to infuse capital to the extent of Rs 1,200 crore to IOB.

The Government will be allotted shares to the tune of Rs 1,200 crore while LIC will be getting shares to the extent of Rs 426 crore. The government’s stake in IOB currently stands at 78.2 per cent.

IOB recently said it would require up to Rs 2,100 crore capital for the current financial year, and it was planning to raise around Rs 900 crore through QIP or private placement.

ravikumar.r@thehindu.co.in

Source: thehindubusinessline

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Atul Agarwal joins IOB as ED

Atul Agarwal joined Indian Overseas Bank as its Executive Director on September 27. Prior to this assignment, he was General Manager in Central Bank of India.

Agarwal joined Union Bank of India as Probationary Officer in 1978 and acquired functional, accounting and information systems knowledge at various levels of operations and management. He moved to Central Bank of India as Assistant General Manager in 2007. He has 28 years of experience in commercial banking.

Source: thehindubusinessline

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IOB seeks Rs 2,100 cr capital infusion from Centre

Indian Overseas Bank (IOB) has sought capital support of Rs 2,100 crore from the government for enhancing its capital base.

“We have requested government to infuse Rs 2,100 crore so that our Tier-I capital reaches 8 per cent,” IOB Chairman and Managing Director M Narendra told PTI.

Tier-I capital or the equity capital of the bank stood at 7.80 per cent at the end of March 2013.

As of March 2013, the total capital funds of the bank stood at Rs 18,366 crore due to allotment of preferential shares to the government of India.

The bank got Rs 1,000 crore from the government last fiscal as part of recapitalisation package.

Earlier this year, Finance Minister P Chidambaram had said all public sector banks are meeting Basel III requirements for capitalisation, though four of them - Indian Overseas Bank, IDBI Bank, Bank of Maharashtra and Dena Bank - have Tier-1 capital below 8 per cent.

The government will take steps to ensure that these banks have 8 per cent Tier-1 capital by the end of the current fiscal year, Chidambaram had said.

Other lenders like Punjab National Bank have sought Rs 1,500 crore capital infusion by the government while Chennai-based Canara Bank has sought Rs 1,000 crore during the current fiscal.

Source: thehindubusinessline

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Technical glitch in IOB’s core banking system hits service

A technical snag in Indian Overseas Bank’s core banking system (CBS) on Monday affected services across the country.

According to M. Narendra, Chairman and Managing Director of the bank, following a usual maintenance work, a complex technical malfunction cropped up in the system that restrained banking services to its customers. While the transactions were carried out on the basis of account holders’ Saturday balance in some branches across the country, the bank’s ATM network could not transact any business on Monday.

However, Narendra explained that while customers of other banks could withdraw money from IOB ATMs, IOB customers were able to transact their business on other banks’ ATMs. “Our technical team is working on this, and we hope to get the system back in order by tomorrow,” he said.

The bank has 3,000 branches and a little over 2,000 ATMs.

Meanwhile, the bank has appointed EY (formerly, Ernst & Young) as consultant to shift its core banking system “from an individual platform to Oracle base” in order to align with other banks’ CBS, said Narendra. Since most banks are on the Oracle platform, the rest of the banks were asked to migrate to it. Currently, some banks, including IOB, Canara Bank and Syndicate Bank, are using individual platforms.

ravikumar.r@thehindu.co.in

Source: thehindubusinessline

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IOB on network expansion spree

Indian Overseas Bank is aggressively expanding its network. The bank has added nearly 1,000 branches to its network in the last three years.

The 3,000th branch of the bank is to be inaugurated on August 17 at Vaniankudi by Union Finance Minister P. Chidambaram. This is to be followed by another at Kothakottai in Pudukottai District on August 18.

IOB, according to its Chairman and Managing Director Narendra, has risen to become the seventh largest bank in the country.

Source: thehindubusinessline

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IOB net profit slides 46% on higher provisioning

Indian Overseas Bank has posted a 46 per cent drop in net profit at Rs 126 crore for the first quarter ended June 30, 2013, against Rs 233 crore in the first quarter of 2012-13. “This is mainly due to a 50 per cent spike in provisions compared with last year,” said M. Narendra, Chairman and Managing Director of the bank.

According to him, there was an additional provision of Rs 49 crore towards restructured accounts, and close to Rs 400-crore additional provision towards non-performing assets made during the quarter. This has taken the total provision for the period to Rs 929 crore (from Rs 613 crore in the comparable previous year quarter).

Drop in interest income

There was also a drop in net interest income at Rs 1,316 crore (Rs 1,328 crore). However, this was more than made up by increased non-interest income. Including profit from sale of investments, non-interest income of the bank, for the quarter under consideration, stood at Rs 785 crore (Rs 377 crore).

During the quarter, the bank consciously brought down high-cost bulk deposits to 11.2 per cent during the quarter from 15.50 per cent in the previous quarter. It reported an overall growth of 6 per cent in deposits to Rs 1.96 lakh crore (Rs 1.84 lakh crore. Advances too grew by over 12 per cent to Rs 1.66 lakh crore (Rs 1.48 lakh crore).

Gross NPA went up to 4.45 per cent (Rs 7,432 crore) as on June 30, 2013, from 2.97 per cent (Rs 4,410 crore) in 2012. The bank’s restructured loan portfolio stood at Rs 18,356 (Rs 18,049). The addition of Rs 307 crore came from 17 accounts, of which five were CDR accounts, with the steel and paper industries being the major contributors to this, he said. Provision coverage ratio was at 58.69 per cent at the end of the quarter.

Cash recovery

Cash recovery during the quarter was at Rs 198 crore against Rs 106 crore in the year-ago period. In the following quarters, the bank will focus on recovery and increasing the ratio of current account and savings account.

If the bank’s business grows by 14-16 per cent, it may require Rs 2,100 crore of additional capital to meet adequacy norms.

ravikumar.r@thehindu.co.in

Source: thehindubusinessline

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IOB branch managers’ meet

Karnataka Health Minister U.T. Khader inaugurated the branch managers’ meeting of Indian Overseas Bank (IOB) in Mangalore on Sunday.

A press release by the bank said here that Khader expressed happiness over the bank’s initiative to provide assistance for oxygen supply at the Government Wenlock Hospital in Mangalore city.

He also lauded the bank’s move to create awareness on dengue and malaria among citizens, the release said. Vasantha Kumar C.S., General Manager of IOB, and K. Anil, Deputy General Manager, were present on the occasion, it said.

Source: thehindubusinessline

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IOB focuses on bad loan recovery

Indian Overseas Bank will step up its thrust on making recoveries from bad loans in FY2014, said a top official. The public sector bank has set a target to recover Rs 2,500 crore from bad loans in FY2014, against Rs 1,700 crore recovered in FY2013, according to Chairman and Managing Director M. Narendra. “We have vested our branch managers with power to enter into one-time settlement with borrowers, whose loan outstanding is up to Rs 5 lakh. Further, we are organising camps (loan recovery) and resorting to Lok Adalats to make recoveries,” said Narendra. In the case of bad loans with an outstanding of Rs 1 crore or more, each general manager at the head-office has been assigned the responsibility of recovery in three to four regions. The bank’s bad loans increased Rs 2,688 crore in FY2013 to Rs 6,608 crore as at March-end 2013.

Source: thehindubusinessline

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IOB to focus on increasing CASA, NPA recovery

Indian Overseas Bank (IOB) said it will focus on increasing the share of the low—cost deposit base along with recovery of bad assets to contain NPA in the current financial year.

“Our major focus will be on enhancing current account, savings account (CASA) base with higher recovery from bad assets to contain NPA (non—performing asset) in the current financial year,” Chairman and Managing Director of the Bank M Narendra told reporters here.

The public sector lender, which had witnessed 89 per cent drop in net profit in the fourth quarter to Rs 59 crore due to rise in bad assets, has set a target to recover around Rs 2,500 crore in the ongoing fiscal.

IOB’s gross NPA rose to 4.02 per cent by the end of March 2013 from 2.74 per cent in FY12. Net NPA increased to 2.50 per cent from 1.35 per cent reported a year ago.

Referring to recoveries from debt—ridden Kingfisher Airlines account, Narendra said the bank had retrieved around Rs 11 crore from this loan account from a total exposure of Rs 143 crore.

He said the restructuring pipeline was likely to be around Rs 1,400 crore in FY14.

On low—cost deposit base, Narendra said the bank would try to ramp up its CASA base in the current fiscal. “We reduced our bulk deposit base to 15 per cent in the last fiscal. This year, our focus will be on increasing CASA base.”

The bank’s low—cost deposit base, or CASA, stood at 26.51 per cent by the end of March 2013.

Referring to growth in FY14, the bank said it expects an expansion of 15—18 per cent in advances though this will depend on the overall interest rate environment.

Source: thehindubusinessline

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Provisioning for bad debt pushes IOB net down 88%

The net profit of Indian Overseas Bank plummeted by 88 per cent to Rs 59 crore for the quarter ended March 31, 2013, against Rs 529 crore in the corresponding quarter last year.

The decline was an outcome of provisioning for bad and doubtful debts and restructured accounts, said Chairman and Managing Director M. Narendra.

Total income was Rs 5,898 crore — a 8.92 per cent increase over the same quarter last year.

For the financial year ending March 31, 2013, net profit was down by nearly half, to Rs 568 crore from Rs 1,050 crore the previous year. Total income was Rs 22,649 crore (Rs 19,578 crore).

Higher NPA

The bank’s gross non-performing assets (NPAs), or loans in jeopardy of default at the end of the financial year, increased to Rs 6,607 crore, against Rs 3,920 crore the previous year.

“It was a difficult period. Not many companies came forward to restructure their loans,” Narendra told newspersons.

Narendra said the NPAs of international clients have gone up substantially. “We are going for speedy recovery this year,” he said.

On the domestic front, the NPAs were mainly with small and medium businesses that are going through tough market conditions.

“This year, we should be able to contain the NPA level,” Narendra said.

The bank is cautious on bulk deposits, which have dropped to 11 per cent from 35 per cent. However, core deposits have increased substantially, he said. “This trend is a good sign for the bank and has helped in overall business growth,” he said.

Our Coimbatore Bureau adds: The IOB share price, hovering around Rs 68 for most of the day, took a sharp dive once the results were flashed on the Web sites of stock exchanges just after 3 pm and crashed to a 52-week low of Rs 62.20 on the BSE before pulling back marginally to Rs 63.70 at close.

The stock shed a third of its value in three months after touching a 52-week high of Rs 94.85 on January 7. The bank has cut the dividend payout by half to Rs 2 (Rs 4.50 last year).

Commenting on the results, Vaibhav Agrawal, VP, Banking, Research, Angel Broking, Mumbai, said the bank had reported a “disappointing operating performance” for Q4 of last year.

Asset quality

He felt that because of the asset quality pressures, provisioning expenses had more than trebled on a y-o-y basis, leading to earnings decline by 89 per cent y-o-y.

He said ‘more clarity from the management’ was being awaited about the asset quality pressure faced during the quarter.

raja.simhan@thehindu.co.in

Source: thehindubusinessline

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IOB hopes to meet 15% bulk deposit norm

Indian Overseas Bank (IOB) today said it is hopeful of reducing its bulk deposit level out of the total deposit to the mandated level of 15 per cent by end of the current fiscal.

This would provide space for increase in the Chennai based lender’s net interest margin (NIM) in the fourth quarter of FY13, a top official said.

“We are hopeful of reducing the bulk deposit to 15 per cent by end of the fiscal from more than 30 per cent last fiscal,” IOB Executive Director, A K Bansal said here.

He said the declining bulk deposit rates will also supplement the bank’s NIM.

“Rates of high cost deposits have fallen from a high of 11 per cent in March last year to around 9.6-9.7 per cent level now, which will support margin.”

Bansal said the bank would re-price the bulk deposits, which will come for maturity in the near future.

The bank had earlier said its NIM would be around 2.8 per cent in the fourth quarter.

Last year, the finance ministry has directed the public sector banks to reduce their bulk deposits to 15 per cent of the total deposits by end of this fiscal to improve their profitability and for sound asset-liability management.

On the impact of repo rate reduction in the March 19 mid-quarter policy review meet, Bansal said the bank would take a call on rates taking into account the deposit mobilisation environment.


Source: thehindubusinessline

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IOB allots 12.71-cr equity shares to Govt

Indian Overseas Bank has obtained the approval of its shareholders to create and allot 12.71 crore equity shares to the Government.

According to a press release from the bank, the approval is to create up to 12.71 crore equity shares of Rs 10 each for cash at an issue price of Rs 78.68 a share, including a premium of Rs 68.68 a share, for a total of Rs 1,000 crore to the Government of India.

The bank has already received the amount from the Government and, accordingly, allotted the equity shares to it on preferential basis.


Source: thehindubusinesslinea

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IOB organises free medical camp at Poovachal

Indian Overseas Bank (IOB), lead bank for Thiruvananthapuram, teamed up with Thriveni Ayurveda Hospital and Poovachal village panchayat to jointly conduct a free medical camp at Poovachal on Sunday.

On the occasion, C. Haridas, Chief Regional Manager, IOB, announced that a new branch of the bank would be opened at Poovachal shortly.

Suni Soman, President of the village panchayat, inaugurated the camp.

Among those who spoke were Sudarsanan of Thriveni Hospital and E. Ramachandran, chief manager, IOB.

A large number of people from different areas of Poovachal participated in the medical camp. Free medicines were distributed.


Source: thehindubusinessline

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IOB expects credit growth of 18 per cent in FY13

State-owned Indian Overseas Bank (IOB) today said it expects loan growth of about 18 per cent in the current fiscal.

"In the current fiscal (2012-13), we may be growing by at least 16-18 per cent," IOB Chairman and Managing Director M Narendra said during an event at Hansraj College here.

The Chennai-based bank recorded a 7 per cent growth in net profit at Rs 116.50 crore during the third quarter ended December 2012.

The Reserve Bank of India has projected 16 per cent credit growth for the banking sector for the current fiscal.

Speaking on the budget wish-list of the banking sector, Narendra said the banking sector favours treatment of the non-performing assets (NPAs) as a kind of expenditure.

"Budget expectations that we are having from the banking sector is that these NPAs, which we are having, should be treated as one type of expenditure and we should get income tax benefit to the full extent," he said.

Besides, banks should be allowed to issue long-term bonds with some tax benefits to counter asset-liability mismatch.

"We should be allowed to go for the long-term bonds with a little tax benefit, just like other institutions since there is a lot asset-liability mismatch," he said.



Source: Economic Times

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IOB board okays rights issue

The board of Indian Overseas Bank has approved a rights issue. The bank proposes to issue 20 crore equity shares of face value Rs 10 each at a premium to be decided based on the market conditions.

The bank also proposes to issue 20 crore fully convertible preference shares of face value Rs 10 each at a premium to be decided at the time of the issue.

The resolution is subject to approval by RBI and other authorities. The Government’s shareholding in the equity capital of the bank is at 69.62 per cent.

IOB shares were trading at Rs 85.70, up 0.65 per cent on the BSE.

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