IOB net drops 74%

Indian Overseas Bank (IOB) reported a 73.81 per cent drop in net profit for the quarter ended December 31, 2009, to Rs 101.7 crore as compared with Rs 388.44 crore during the same period last year.

Total income dropped 11.74 per cent during the third quarter to Rs 2,828.65 crore from Rs 3,204.90 crore, a year ago.

The bank attributed the drop to increase in non performing assets, provisions for wage arrears and decline in treasury income.

“The treasury income came down by Rs 365 crore to Rs 17 crore during the third quarter from Rs 382 crore, a year ago,” said SA Bhat, chairman and managing director .

It made a provision of around Rs 130 crore towards arrears and wages. Net NPA increased to Rs 1,690 crore from Rs 920 crore as on December 31, 2008.

Bhat said the bank was planning to use the Sarfaesi Act to sell some of the assets. “We hope to recover 15-20 per cent of the NPA by selling some of the assets to Asset Reconstruction Company (Arcil) and to other asset reconstruction companies.”

IOB is looking to strengthen other fee-based income. “Our immediate focus will be on life insurance,” he said, adding last year the income through life insurance was around Rs 15-20 crore, which will be increased to Rs 75 crore. It has decided to look at long term policy, which will bring more income.

The other areas, which the bank is looking at are non-life insurance and mutual fund.

“We had set a target to grow at 20 per cent during the current fiscal, compared with the last fiscal, but now expect to grow only 15-16 per cent,” said Bhat.