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Public sector lender Indian Overseas Bank (IOB) is expecting to hit profit led by efforts to reduce bad loans, prevention of slippages, reduction of expenses, and the general recovery in the economy.
The bank had posted Rs 454.3 crore loss for the fiscal 2014-15. With the non performing assets (NPAs) on a rise due to slippages in infrastructure and related sectors, the bank is concentrating all efforts to recover as much as possible, and also sell a considerable portion of bad loans to asset reconstruction firms. It is also in the process of improving services through new IT initiatives, which would result in an increased business.
During the quarter ended March 31, 2015, it had recovered around Rs 780 crore cash as part of NPA recovery. The additional quantum of NPA added during the quarter was hardly Rs 300-400 crore, said R Koteeswaran, managing director and CEO of the bank.
“We are trying to control expenses. We will be looking at recovery, upgradation and prevention of slippages going forward. The bank would focus on retail and SME sectors during the current fiscal for growth,” he said.
It is expecting Rs 700-800 crore profit this fiscal, and NPAs to come down to Rs 12,000-12,500 crore. On fund raising plans, he said the bank had headroom to raise around Rs 2,000 crore Tier I capital. “I believe things would be in a better direction in the near future. The bank is on a growth trajectory,” he said.
The bank is looking at selling around Rs 500 crore worth NPAs to asset reconstruction companies. It is also looking at reducing high-cost deposits, said Koteeswaran. Gross NPAs had gone up to Rs 14,922.45 crore (or 8.33 per cent of the gross advances) for the quarter ended March 31, 2015, when compared with Rs 9,090.48 crore during the same quarter of the last year. Net NPAs saw an increase to Rs 9,813.33 crore as against Rs 5,658.12 crore during the same period of the previous year.
However, while it had targeted to sell around Rs 500 crore worth NPAs to asset reconstruction companies during the quarter ended March 31, 2015, however, it was able to offload only Rs 6-7 crore, he added.
Strategic initiatives taken in the fourth quarter towards reduction in the cost of deposits, improved recovery performance and stringent measures on cost controls contributed to reporting net profit during the quarter, said the company, as it had posted a net profit of Rs 35.5 crore during the fourth quarter of the financial year 2014-15.
While this was a 87 per cent drop compared to the net profit of Rs 268.3 crore during the same quarter of the previous fiscal year, there has been an improvement in net profit compared to the quarter ended December 31, 2014, during which it had posted a net loss of Rs 516.03 crore.
The bank had posted Rs 454.3 crore loss for the fiscal 2014-15. With the non performing assets (NPAs) on a rise due to slippages in infrastructure and related sectors, the bank is concentrating all efforts to recover as much as possible, and also sell a considerable portion of bad loans to asset reconstruction firms. It is also in the process of improving services through new IT initiatives, which would result in an increased business.
During the quarter ended March 31, 2015, it had recovered around Rs 780 crore cash as part of NPA recovery. The additional quantum of NPA added during the quarter was hardly Rs 300-400 crore, said R Koteeswaran, managing director and CEO of the bank.
“We are trying to control expenses. We will be looking at recovery, upgradation and prevention of slippages going forward. The bank would focus on retail and SME sectors during the current fiscal for growth,” he said.
It is expecting Rs 700-800 crore profit this fiscal, and NPAs to come down to Rs 12,000-12,500 crore. On fund raising plans, he said the bank had headroom to raise around Rs 2,000 crore Tier I capital. “I believe things would be in a better direction in the near future. The bank is on a growth trajectory,” he said.
The bank is looking at selling around Rs 500 crore worth NPAs to asset reconstruction companies. It is also looking at reducing high-cost deposits, said Koteeswaran. Gross NPAs had gone up to Rs 14,922.45 crore (or 8.33 per cent of the gross advances) for the quarter ended March 31, 2015, when compared with Rs 9,090.48 crore during the same quarter of the last year. Net NPAs saw an increase to Rs 9,813.33 crore as against Rs 5,658.12 crore during the same period of the previous year.
However, while it had targeted to sell around Rs 500 crore worth NPAs to asset reconstruction companies during the quarter ended March 31, 2015, however, it was able to offload only Rs 6-7 crore, he added.
Strategic initiatives taken in the fourth quarter towards reduction in the cost of deposits, improved recovery performance and stringent measures on cost controls contributed to reporting net profit during the quarter, said the company, as it had posted a net profit of Rs 35.5 crore during the fourth quarter of the financial year 2014-15.
While this was a 87 per cent drop compared to the net profit of Rs 268.3 crore during the same quarter of the previous fiscal year, there has been an improvement in net profit compared to the quarter ended December 31, 2014, during which it had posted a net loss of Rs 516.03 crore.
