Indian Overseas Bank trims Q2 loss at Rs 4.87 billion on lower provisions

Net loss of public sector lender Indian Overseas Bank has narrowed to Rs 4.87 billion during the quarter ended September 30, 2018, as compared to a net loss of Rs 12.23 billion during the same period last year.

Net loss, though reduced by 60 per cent during the quarter compared to the same period last year, is due to provisions on bad debts and investment and not due to operations, said the Bank management.

The total income declined 4.67 per cent to Rs 53.48 billion during the three months ended September, this year, compared to Rs 56.10 billion during the corresponding period a year ago.

The gross Non Performing Assets (NPA) grew to Rs 371.1 billion, with ratio of 24.73 per cent, as compared to Rs 347.09 billion (22.73 per cent) during the same period last year. On a sequential quarter, the gross NPA came down by 91 basis points compared to Rs 381.46 billion (25.64 per cent) during the quarter ended June 30, 2018.

The net NPA stood at Rs 188.76 billion (14.34 per cent) compared to Rs 189.49 billion (13.86 per cent) during the corresponding period of last financial year. The Net NPA also reduced during the quarter compared to the previous quarter, said the Bank.

The total recovery during the quarter ended September, 2018, was Rs 44.62 billion as against Rs 39.65 billion during the same period previous year, while the fresh slippage was at Rs 8.84 billion compared to Rs 26.93 billon during the same period last year.

It has recovered Rs 2.47 billion in six accounts referred to National Company Law Tribunal (NCLT) during the quarter and it is expecting recovery to the tune of Rs 8.02 billion during the October-December quarter in two NCLT accounts where resolution is at an advanced stage.

The Bank has evolved a policy of not taking fresh exposures in stressed sectors, below hurdle rated accounts and below rated accounts. It has also exited from accounts in the stressed sectors, wherever feasible.

The credit portfolio has been rebalanced with Retail, Agriculture and MSME shares of total domestic advances improving from 60.84 per cent to 65.89 per cent compared to previous year.

While the operating profit grew 25.51 per cent to Rs 13.04 billion during the quarter compared to Rs 10.39 billion registered in the same period last year, the provisions and contingencies reduced by 20.79 per cent to Rs 17.91 billion compared to Rs 22.61 billion during these quarters.

The provision coverage ratio of the Bank by the end of September, stood at 61.97 per cent. The Net Interest Margin is 1.91 per cent during the quarter, compared to 1.92 pe rcent during the quarter ended June, 2018.

The Bank has received infusion of Rs 21.57 billion from the Government of India on July 23, 2018, towards contribution of the Central Government in the preferential allotment of equity shares of the Bank, as government's investment. This is pending for allotment at present and an extraordinary general meeting of shareholders is scheduled on November 2, to obtain the approval of shareholders for issue of equity shares to the Centre on a preferential basis.