Efforts to revive bank yielding results: IOB chief

IOB on Thursday reported around 46% reduction in its net loss during H2FY17

Indian Overseas Bank (IOB) said on Thursday that around 46 per cent reduction in its net loss during the second half of the financial year 2016-17 (FY17) was an indication that corrective actions taken by the bank were yielding results.

IOB’s net loss in the first half of FY17 was Rs 2,216 crore, while it was Rs 1,201 crore in the second half — a drop of about 46 per cent, said R Subramaniakumar, managing director and chief executive officer, IOB, while addressing a meeting of shareholders in Chennai.

The bank, however, reported a cumulative net loss of Rs 3,417 crore for FY17, against Rs 2,897 crore the previous year. 

IOB has been under the Reserve Bank of India’s (RBI’s) radar for high non-performing assets (NPAs). 

As on March 31, 2017, the bank’s gross NPA stood at Rs 35,098 crore with a ratio of 22.39 per cent as against Rs 30,049 crore on March 31, 2016, with a ratio of 17.40 per cent. One of the reasons for IOB’s high gross NPA ratio is the contraction of credit by 9.23 per cent year-on-year.

The recovery of NPAs for FY17 was higher at Rs 8,710 crore compared with Rs 5,872 crore in FY16. Net NPA was contained to Rs 19,749 crore at 13.99 per cent on March 31, as against Rs 19,213 crore at 11.89 per cent a year ago, Subramaniakumar said.

He said the bank’s total deposits stood at Rs 2,11,343 crore as on March 31 as it had reduced the concentration of bulk deposits and high-cost deposits to have a stable deposit profile.

Gross advances stood at Rs 1,56,776 crore as on March 31, as against Rs 172,727 crore a year ago due to the bank resizing its balance sheet by concentrating more on quality lending and muted credit scenario, he said.

Operating profit for FY17 was Rs 3,650 crore against Rs 2,885 crore for FY16, registering y-o-y growth of 26.52 per cent, which indicated substantial improvement in the overall efficiency of the bank, the CEO said.

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Subramaniakumar said the bank had developed a comprehensive framework for its turnaround and was geared up to implement it. 

The focus areas, he said, included business growth through a balanced approach to credit growth viz. special focus on driving credit growth in the retail and MSME space balanced with quality lending in large corporate and mid-corporate portfolio, increase in fee-based income, NPA resolution and management, arresting fresh slippages, and rationalisation of branches.

The bank also received approval from the shareholders for issue of shares to the public not exceeding 130,11,23,460 equity shares by way of public issue, rights issue or others to raise around Rs 1301 crore as well as the issue of shares on preferential basis to the government up to 9,78,30,018 equity shares.