IOB to focus on asset quality, CASA deposits

Bank's total business as on March 31, 2013, reached Rs 3,66,501-cr from Rs 3,21,707-cr a year ago, an increase of around 13.28%

Public sector Indian Overseas Bank (IOB) has said it would focus on improving Current and Savings Account (CASA) deposits and on reducing non-performing assets (NPA), while improving the net interest margin (NIM) during the current financial year.

Addressing the shareholders last week at the bank's annual general meeting, M Narendra, chairman and managing director, IOB, said the bank's total business as on March 31, 2013, reached Rs 3,66,501-crore from Rs 3,21,707-crore a year ago, an increase of around 13.28 per cent.

Last fiscal banks had to operate in an environment of slow growth caused by the slump in economic conditions through the year. Certain industrial sectors like iron and steel, textiles, aviation besides infrastructure faced stress impacting banks' exposure to them.

There was a spurt in the number of accounts referred to restructuring category, said Narendra, while not sharing the number of such accounts.

Softening of global commodity prices and improved economic conditions in the developed countries, pick-up in the Indian export prospects, favourable monsoon conditions and the recent economic revival measures announced by the government are expected to improved the growth prospects in the coming year and also revive investor sentiments, he added.

The bank has made good cash recovery and upgradation of Rs 1,755 crore in NPA accounts in 2012-13. It has set up specialised asset recovery management branches to improve the recovery of NPA accounts.

The banks gross NPA ratio was at 4.2 per cent as on March 31, 2013, as against 2.74 per cent in March 31, 2012 and net NPA was up at 2.50 per cent as against 1.35 per cent in the corresponding period a year ago.

Fund raising
IOB has sought shareholders' approval to mobilise Rs 413-crore to comply with the capital adequacy norms, considering its business growth.

The fund would be mobilised through issuance of 413 million shares of the face value of Rs 10 each, either through fresh equity, rights issue, preference shares or qualified institutional placement.

The banks existing equity share capital stands at Rs 924 crore.

The proposed fresh capital will take the total paid-up share capital to Rs 1,337 crore, which will be well within the total authorised capital of Rs 3,000 crore.

Narendra said CAR according to the Basel II framework as on March 31, 2013, worked out to be 11.85 per cent. In its annual report, it stated the finance ministry has allocated Thailand, Vietnam, Mongolia, Sri Lanka and Republic of Korea for IOB to open its branches either through joint ventures or through wholly-owned subsidiaries.