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Indian Overseas Bank.

BSE: 532388 Sector: Financials
NSE: IOB ISIN Code: INE565A01014
BSE LIVE 15:59 | 18 Aug 22.70 -0.20
(-0.87%)
OPEN

22.75

HIGH

22.80

LOW

22.50

NSE 15:58 | 18 Aug 22.60 -0.15
(-0.66%)
OPEN

22.65

HIGH

22.80

LOW

22.40

OPEN 22.75
PREVIOUS CLOSE 22.90
VOLUME 42747
52-Week high 32.25
52-Week low 21.10
P/E
Mkt Cap.(Rs cr) 5,572
Buy Price 0.00
Buy Qty 0.00
Sell Price 22.70
Sell Qty 3074.00
OPEN 22.75
CLOSE 22.90
VOLUME 42747
52-Week high 32.25
52-Week low 21.10
P/E
Mkt Cap.(Rs cr) 5,572
Buy Price 0.00
Buy Qty 0.00
Sell Price 22.70
Sell Qty 3074.00

Indian Overseas Bank. (IOB) - Director Report

Company director report

Directors' Report 2016-17

The Board of Directors has pleasure in presenting the Annual Report together withAudited Balance Sheet and Profit & Loss Account of the Bank for the year ended 31stMarch 2017.

Global Business Performance

The Indian economy is growing strongly and remains a bright spot in the globallandscape. The halving of global oil prices that began in late 2014 boosted economicactivity in India further improved the external current account and fiscal positions andhelped lower inflation. In addition continued fiscal consolidation by reducinggovernment deficits and debt accumulation and an anti-infiationary monetary policy stancehave helped cement macroeconomic stability.

The government has made signifi cant progress on important economic reforms which willsupport strong and sustainable growth going forward. In particular the upcomingimplementation of the goods and services tax which has been in the making for over adecade will help raise India's medium-term growth to above 8 percent as it will enhancethe effi ciency of production and movement of goods and services across Indian states.However a key concern for India is the health of the banking system which is stilldealing with a large amount of bad loans and also heightened corporate vulnerabilities inseveral key sectors of the economy.

As a result the Bank continued its efforts towards rebalancing its Balance Sheet underreview year also. The Bank reduced the concentration of Bulk deposits and stayed away fromlarge scale lending during the year. As a result the Global Business level stood atRs.368118 crore as on 31st March 2017 against Rs. 397241 crore as on 31stMarch 2016. The global deposits and gross advances stood at Rs.211343 crore andRs.156776 crore respectively as on 31st March 2017 against Rs. 224514 croreand Rs. 172727 crore respectively as on 31st March 2016. The demonetisationgave much needed boost to the low cost deposit profi l e of the Bank. The Bank also wentahead with reducing the dependence on bulk deposits to reduce the concentration risk andto have a stable deposit profile. The larger focus lied towards curtailing the NPAs withconcerted efforts towards containing the fresh slippages level along with recoveries fromthe existing NPAs. The Banks new CBS platform has been stabilised and is currently poisedtowards leveraging the benefits of the new software version.

Financial Performance

The overall efficiency of the Bank has seen substantial improvement during the yearunder review. This has helped the Bank to report a higher global operating profit ofRs.3650 crore in 2016-17 compared to Rs.2885 crore in 2015-16. It may also be noted thatthe higher level of effi ciency has been obtained with a rebalanced business levels incomparison to previous years. Even though the gross NPA level has increased over the yearthe growth % has been substantially brought down in comparison to the previous year. TheGross NPAs stood at Rs.35098 crore for March 2017 as against Rs. 30049 crore in March2016. The resultant higher provision requirement of Rs.7067 crore during the year forcedthe Bank to report a Net Loss of Rs.3417 crore for the year. The Bank had reported Rs.2897 crore of loss during 2015- 16.

Income and Expenditure Analysis

The year under review focused mainly on efficiency in operations and had put in placevarious strategies towards cost reduction at all levels. The Bank continued its efforts toreduce the bulk deposits contain fresh slippages reduce the administrative expenses.

The domestic CASA deposits stood at Rs.75446 crore as on 31st March 2017 as againstRs. 63609 crore as on 31st March 2016. The CASA% stood higher at 36.78 % as on31st March 2017 as against 29.10% as on 31st March 2016.

The higher level of CASA and reduction of the bulk deposits helped the Bank to reducethe domestic Cost of deposits which ended at 6.32% for FY 2016-17 as against 7.28% in FY2015-16. RBI had reduced Repo rates by 50 basis points during the period under reviewwhich also helped in reducing the card rates in a gradual manner.

The Bank's one year MCLR rate which stood at 9.70% as of 1st April 2016 wasbrought down to 8.65 % during the review period in line with the industry trend. Furtherthe incremental NPAs had higher impact on the revenues. As a result of the above factorsthe yield on domestic advances came down to 8.92% for FY

2016- 17 as against 9.87% in the previous year.

The domestic yield on investments was maintained at 7.36% for the whole year2016-17 compared to 7.41% in 2015-16. The Bank was able to maintain the global Netinterest margin reasonably at 2.03% in 2016-17 as against 1.94%. The Bank maintained aProvision Coverage Ratio of 53.63 % for FY 2016-17 as against 47.39% for FY 2015-16.

Capital Raised during 2016-17

The Bank issued 91748448 equity shares of Rs.10/- each for cash at issue price ofRs.28.55 per equity share (including premium of Rs.18.55 per equity share) aggregatingupto Rs.261.94 crore on QIP basis and 555714797 equity shares of Rs.10/- each for cashat issue price of Rs.27.91 per equity share (including premium of Rs.17.91 per equityshare) aggregating upto Rs.1551 crore to Government of India on Preferential Basis.Hence the paid up capital of the Bank has increased from Rs.1807.27 crore to Rs. 2454.73crore. Government of India's shareholding has increased from Rs.1397.33 crore (77.32%) toRs.1953.04 crore (79.56%) and the Public Shareholding stood at Rs.501.69 crore (20.44%).

Authorised Capital

As on 31st March 2017 the Authorized Capital of the Bank is Rs.10000 crorewhich was increased from Rs.3000 crore vide GOI notification dated 27th Feb2017.

Capital Adequacy Ratio

The Bank's capital adequacy ratio as on 31st March 2017 stood at 10.50 % asper Basel III norms.

Branch Network

During the year under review the Bank opened 9 branches across the country. Out ofthese 5 branches (55.55%) are located in Rural and Semi Urban centres of which 3branches are located in Unbanked Rural centres.

As on 31st March 2017 the Bank had 3373 domestic branches as against3397 branches as on 31st March 2016 comprising of 922 rural branches (27.33%) 1001 SemiUrban branches (29.67%) 692 Urban branches (20.51%) and 758 Metropolitan branches(22.47%). Besides the Bank has 7 Zonal Offices 49 Regional Offices 4 ExtensionCounters 20 Satellite Offices 3 City Back Offices 18 MSME Processing Centres and 6Inspectorates. During the year under review the Bank has closed 33 branches with a viewto rationalize administrative costs.

Corporate Governance

Corporate Governance reflects the built in value system of the Bank in conducting itsday to day affairs. The Bank lays emphasis on ensuring that structures and processes areput in place to help in compliance of the government responsibilities.

IOB - Code of Conduct for Prohibition of Insider Trading 2015

IOB Code of Conduct for Prohibition of Insider Trading 2015 regulates monitors andreport trading by the designated persons of the Bank.

Securities and Exchange Board of India - Listing Obligations and DisclosureRequirements Regulations 2015 (LODR)

As per SEBI (LODR)

> The Bank is providing remote e-voting facility to its shareholders in all AnnualGeneral Meetings/ Extraordinary General Meetings

> The code of conduct is applicable to all members of the Board and the SeniorManagement (i.e. General Managers of the Bank).

> The Bank is also submitting a quarterly compliance report on Corporate Governanceto the Audit Committee of the Board and to Stock Exchanges.

> The Bank is submitting Quarterly Investor Grievance Report to the BSE Limited andNational Stock Exchange Limited where Bank's shares are listed.

Investor Education & Protection Fund (IEPF)

Ministry of Corporate Affairs (MCA) Government of India has advised the Bank theprocess of transfer of unpaid dividend amount to the Central Government. AccordinglyUnpaid Dividend amount pertaining to 2008-09 has been transferred to IEPF by the Bank on 5thAugust 2016 and complied with the Government of India guidelines. The unpaid Dividend datapertaining to the years 2009-10 to 2013-14 is ported in MCA website and is also availableat www.iob.in.

Bank is complying with all guidelines/regulations laid down by

Regulatory authorities and Government of India. Bank regularly redresses theshareholders grievances without any time delay.

Board of Directors

Dr. Jai Deo Sharma Officer Employee Director completed his three year term on 1stMay 2016. Shri R.Koteeswaran Managing Director & Chief Executive Officer retired onattaining superannuation on 30th June 2016. Dr.Alok Pande Govt. NomineeDirector demitted offi ce on 21st July 2016. Shri Pawan Kumar Bajaj ExecutiveDirector demitted offi ce on 9th August 2016. Shri Atul Agarwal ExecutiveDirector retired on superannuation on 30th Sept 2016. Shri Chinnaiah Smt.S.Sujatha and Shri A.B.D.Badushas Parttime Non- Official Directors completed their threeyear terms on 12th Nov 2016 4th Dec 2016 and 11th Dec 2016respectively. Shri R. Sampath Kumar Workmen Employee Director completed his three yearterm on 23rd Jan 2017.

Ms.Annie George Mathew has been nominated as Government Nominee Director with effectfrom 22nd July 2016. Shri K.Raghu has been nominated as Chartered AccountantDirector for a period of three years from 26th July 2016 to 25thJuly 2019. Shri Vishnukumar Bansal has been appointed as Additional Director from 8thAugust 2016 to 7th August 2018. Shri R. Subramaniakumar has been appointed asExecutive Director of the Bank from 29th September 2016 to 21st Jan2019. He has been entrusted the additional charge of MD & CEO for a period of 3 monthsfrom 11th November 2016 to 10th February 2017 and for a period ofanother 3 months from 28th February 2017 to 27th May 2017. ShriT.C.A. Ranganathan has been appointed as Non Executive Chairman from 16th Feb2017 to 15th Feb 2020. Shri K. Swaminathan has been appointed as ExecutiveDirector of the Bank from 17th Feb 2017 to 16th Feb 2020.

The Board of Directors places on record their appreciation for the valuablecontributions made by the erstwhile Directors and welcomes the new Directors.

Acknowledgement

The Board of Directors are grateful for the valuable guidance and support received fromthe Government of India Reserve Bank of India Securities and Exchange Board of India(SEBI) Stock Exchanges State Governments Financial Institutions and all OverseasRegulators. The Board of Directors acknowledge with thanks the valued Customers EmployeesUnion Officers Association domestic and international banking group the shareholders& other stake holders for their valued support and continued patronage with the Bank.

The Board also wishes to place on record its profound appreciation for the valuablecontribution of the Bank's Staff at all levels and looks forward to their continuedinvolvement with commitment towards achieving the future goals.

For and on behalf of the Board of Directors

Chennai (R. SUBRAMANIAKUMAR)
17th May 2017 Managing Director & Chief Executive Officer