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IOB profit rises 7.6%

Read more on:    Result | Earning | Crr | M Narendra | Q3fy13 | Indian Overseas Bank
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(IOB) has reported a 7.60 per cent growth in net profit during the third quarter ended December 2012 at Rs 116.50 crore, up from Rs 108.27 crore from a year-ago period.

Chairman and Managing Director attributed the growth to retiring high cost bulk deposits at 21.23 per cent, compared with 34 per cent a year ago. The other reasons include raise in non-interest income, which rose by 25 per cent to Rs 514 crore from Rs 411 crore.

He said the provisioning has increased to Rs 436.37 crore in the third quarter from Rs 252.80 crore a year ago. The high provision was due to stressed accounts in sectors such as infrastructure, paper industry and aviation.

However, in percentage terms, provisioning is lower for the third quarter of FY13 at 59 per cent, compared with 71.70 per cent in FY12.

Gross non performing assets increased to Rs 3,595.14 crore from Rs 1,599.74 crore a year ago. With the provision likely to be moderate in the current quarter and more bulk and high cost deposits to retire during the next, IOB expects to post better profits.

Besides, RBI’s cut in will leave the bank Rs 475 crore additionally. By deploying this, IOB will get around Rs 48 crore as additional , which will increase profitability.

The bank had reported a profit of Rs 1,050 crore in FY12. Narendra said the bank expects to maintain to the same level in FY13. He said the bank has recovered Rs 199 crore in the third quarter, up from Rs 173 crore a year ago.

On fund raising, he said the government has agreed to infuse around Rs 1,000 crore as against the bank’s requirement of Rs 1,500 crore. For the remaining, the bank will look at rights issue and qualified institutional placement (QIP) at an appropriate time, said Narendra. “We can also tap other government financial institutions like the Life Corporation of India, which infused around Rs 300 crore earlier,” he added.

In response to RBI’s decision to cut CRR by 25 basis points, IOB has decided to lend housing loans at the base rate of 10.5 per cent up to Rs 75 lakh.

At present, the bank lends housing loans up to Rs 30 lakh for 10.50 per cent, which will be expanded to Rs 75 lakh, irrespective of the loan tenure.

“We will consider passing on the CRR cut benefits to the customer in other portfolios, too,” said Narendra.

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