Stung by lower net interest income and a sharp increase in provisions, Indian Overseas Bank posted a net loss of Rs 245.51 crore for the quarter ended September 30,2014 as compared with a net profit Rs 132.55 crore in the year-ago period.
Provisions zoomed 44 per cent to Rs 892.4 crore and asset quality worsened with the gross non-performing asset (NPA) ratio going up to 7.35 per cent in the July-September period compared to 5.84 per cent in the preceding quarter. Net NPA ratio for the Chennai-based bank was 5.17 per cent against 3.85 per cent in the same period. In absolute terms, gross NPA was Rs 13,334 crore as against Rs 10,351 crore in the preceding quarter.
The bank's provision coverage ratio as on September 30 this year stood at 48.74 per cent.
Net interest income dropped by seven per cent to Rs 1,344.46 crore, which was lower than Rs 1,452 crore reported last year.
Total income increased from Rs 5,999.7 crore for the quarter ended September 30, 2013 to Rs 6,440.7 crore. Total business of the bank grew by 5.4 per cent to Rs 4,20,739 crore from Rs 3,99,188 crore, a year ago.
Fresh slippages in non-performing asset were Rs 3,000 crore during the quarter which put pressure on the bank’s bottomline. In addition, rising bonds yields during the second quarter forced the bank to make mark-to-market provisioning of Rs 113 crore.