IOB hopes to do a better job on NPAs in Q3

IOB's gross non-performing asset ratio at the end of September, 2013 was 4.65%, while its net bad loan ratio was 2.83%

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Indian Overseas Bank (IOB) believes it could cap the rise in non-performing loans from mid-size and large-size companies in the second half of this financial year.

"We see the situation becoming a little better in the second half," said M Narendra, chairman and managing director, on the sidelines of the BANCON 2013 meet, here on Friday.

He, however, did not offer details on the sectors where loan recovery rates are expected to improve. The state-run bank is lender to several companies in sectors under stress, such as power, steel and gems & jewellery.

IOB's gross ratio of non-performing assets to the total was 4.65 per cent at the end of September, while its net bad loan ratio was 2.83 per cent. The bank had a provision coverage ratio of 59.3 per cent at the end of the quarter. Gross advances were Rs 176,300 crore at the end of September.

According to senior executives, almost 10 per cent of IOB's total loan book comprises advances to mid-sized steel companies. "With this, the lending limit for the sector is full," said a general manager.

Some of the senior executives, however, doubted if the bank would be able to improve its asset quality significantly in the coming quarters. "Loan repayment by corporates is still under stress. Some companies have opted for debt restructuring," said a general manager.