IOB net profit rises 7.6%

Indian Overseas Bank (IOB) reported a 7.60 per cent growth in net profit during the third quarter ended December 2012 at Rs 116.50 crore as against Rs 108.27 crore in the same period last year.

Chairman and managing director M Narendra attributed the growth to retiring high cost bulk deposits at 21.23 per cent, compared with 34 per cent a year ago. The other reasons include increase in non-interest income, which was up 25 per cent to Rs 514 crore from Rs 411 crore.

Provisioning increased to Rs 436.37 crore in the third quarter from Rs 252.80 crore due to stressed accounts in sectors such as infrastructure, paper industry and aviation. However, in percentage terms, provisioning was lower for the third quarter of FY13 at 59 per cent, compared with 71.70 per cent in FY12.

Gross NPAs increased to Rs 3,595.14 crore from Rs 1,599.74 crore a year ago. With the provision likely to be moderate in the current quarter and more bulk and high cost deposits to retire during the next, IOB expects to post better profits.

Besides, RBI’s cut in CRR will leave the bank Rs 475 crore additionally. By deploying this, IOB will get around Rs 48 crore as additional earning, which will increase profitability.

The board, meanwhile, approved its proposal to raise Rs 1,542 crore (including premium) from the Government of India and Life Insurance Corporation, it informed the BSE.

In response to RBI’s decision to cut CRR by 25 basis points, IOB has decided to lend housing loans at the base rate of 10.5 per cent up to Rs 75 lakh. At present, the bank lends housing loans up to Rs 30 lakh for 10.50 per cent.