IOB Q3 net down 35% on bad loans

However, the total income increased 6% to Rs 6,190 cr

Public sector Indian Overseas Bank (IOB) posted a 35.6 per cent drop in net profit at Rs 75.07 crore for the third quarter (Q3) of the current financial year, as against Rs 116.50 crore in the same period last fiscal.

M Narendra, chairman and managing director, IOB, said the drop was mainly due to higher provisioning towards bad debts and restructured accounts.

In the third quarter, IOB allotted Rs 688.29 crore towards bad debts as against Rs 485.87 crore in second quarter of the current fiscal. Towards restructuring, it allocated Rs 60.75 crore. The bank’s coverage ratio stood at 56.59 per cent.

Total income during the period saw a 5.9 per cent rise at Rs 6,190.26 crore, when compared with Rs 5,846.98 crore last year

“Last year had been challenging and the bank was focusing on recovery and priority lending,” said Narendra.

Due to a drop in yield on advances, the net interest margin (NIM) in Q3 dropped to 2.26 per cent from 2.39 per cent in second quarter.

Net non performing assets (NPA) increased to Rs 5,481.11 crore during the quarter at 3.24 per cent as against Rs 3,595.14 crore at 2.33 per cent for the corresponding quarter of last year.

Gross NPAs increased to Rs 9,168.08 as against Rs 6,515.57 crore in the same period last year.

The bank’s capital adequacy ratio improved to 10.99 per cent after the Centre’s Rs 1,200 crore capital infusion. It has also called for an extraordinary general meeting (EGM) to seek nod for the proposed infusion of Rs 426 crore by Life Insurance Corporation through the qualified institutional placement  route.