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Indian Overseas Bank.

BSE: 532388 Sector: Financials
NSE: IOB ISIN Code: INE565A01014
BSE 00:00 | 23 Aug 9.41 0.16
(1.73%)
OPEN

9.25

HIGH

9.70

LOW

9.04

NSE 00:00 | 23 Aug 9.40 0.20
(2.17%)
OPEN

9.25

HIGH

9.75

LOW

9.00

OPEN 9.25
PREVIOUS CLOSE 9.25
VOLUME 67670
52-Week high 17.25
52-Week low 9.00
P/E
Mkt Cap.(Rs cr) 8,602
Buy Price 9.41
Buy Qty 1000.00
Sell Price 9.60
Sell Qty 13.00
OPEN 9.25
CLOSE 9.25
VOLUME 67670
52-Week high 17.25
52-Week low 9.00
P/E
Mkt Cap.(Rs cr) 8,602
Buy Price 9.41
Buy Qty 1000.00
Sell Price 9.60
Sell Qty 13.00

Indian Overseas Bank. (IOB) - Director Report

Company director report

The Board of Directors have pleasure in presenting the Annual Report together withAudited Balance Sheet and Profit & Loss Account of the Bank for the year ended 31stMarch 2018.

Global Business Performance

Fiscal year 2017 witnessed a significant improvement in global economic growth andtrade situation. However Geopolitical tensions between US and China was a major cause ofconcern as strenuous relations between the two could weigh down global trade. India ispegged to be the fastest growing economy in the world in 2017-18 and will be a key driverfor global growth. As per the economist reports the first quarter of the year saw theimpact of demonetisation settling down in the next quarter introduction of the Goods andServices Tax (GST) brought in some pressures as businesses adjusted to the new regime.However from the third quarter onwards signs of growth returning were evident. Privateinvestment activity in India has been weighed down by capacity related issues and firms'(especially corporate) stressed balance sheets. Economic growth has been heavily dependenton consumer spending and public investment by the government. However capital goodsoutput a proxy for investment activity in the economy rose for the seventh straightmonth in February at 20% the fastest pace in 20 months. India's retail in ationdecelerated for the fourth consecutive month in March to 4.28%. RBI has lowered its ination forecast for 2018-19 to 4.7%-5.1% in the first half and 4.4% in the second half. Thecentral bank has a mandate of achieving the medium-term target for in ation of 4% within aband of +/- 2 percentage points while supporting growth. The Reserve Bank of India hassteadily cut the repo rate from 7.25 per cent in August 2015 to 6 per cent in August 2017.Since then the RBI has held the policy rate steady with a greater emphasis on revivingdomestic growth.

The Bank continued its efforts towards rebalancing its Balance Sheet under the currentyear. The focus was laid on to improve the RAM portfolio with a view to mitigate the riskand improve capital efficiency. The Bank further reduced the concentration of Bulkdeposits and improved the share of low cost deposits. The Global Business level stood atRs. 367831 crores as on 31st March 2018 against Rs. 368118 crores as on 31st March2017. The global deposits and gross advances stood at Rs. 216832 crores and Rs. 150999crores respectively as on 31st March 2018 against Rs. 211343 crores and Rs. 156776crores respectively as on 31st March 2017.

Financial Performance

The efforts during the current year were to improve the operational efficiency as theoperating environment remained firm. The right sizing of balance sheet had its impact felton the revenue streams substantially. Focused attention was laid to improve the incomefrom non-core operations which helped the Bank to maintain its operational efficiency. Asa result the Bank maintained its operating profit which ended at Rs 3629 crores in FY2017-18 compared to Rs. 3650 crores recorded in previous year. Gross NPA had increased toend at Rs. 38180 crores for FY 2017-18 as against Rs. 35098 crores in FY 2016-17 majorfallout of the changes in regulatory guidelines. The resultant higher provisionrequirements of Rs.9929 crores during the year forced the Bank to report a Net Loss ofRs.6299 crores for the year. The Bank had reported Rs. 3417 crores of loss during2016-17.

Income and Expenditure Analysis

The rebalancing of asset side of the Balance sheet had major impact on the revenues ofthe Bank. Even though the Bank got benefit from its focused attention on low cost depositwith a favorable Cost of Deposits the NPA levels & Capital constraints restricted thegrowth opportunities to improve the income level. Maximum effort was laid on towardsimproving the Non interest income with higher thrust given on automating charges which hasyielded results. It is noteworthy to mention that the Non Interest Income recorded agrowth of 11.08% to end at Rs. 3746 crores as against Rs. 3373 crores recorded in FY2016-17. The domestic CASA deposits stood at Rs. 78739 crores as on 31st March 2018 asagainst Rs. 75446 crores as on 31st March 2017. The CASA% stood higher at 37.43% as on31st March 2018 as against 36.78% as on 31st Mar 2017.

The higher level of CASA and reduction of the bulk deposits helped the Bank to reducethe domestic Cost of deposits which ended at 5.62% for FY 2017-18 as against 6.32% in FY2016-17. The Bank's one year MCLR rate which stood at 8.65% as of 1st April 2017 wasbrought down to 8.40 % during the review period in line with the industry trend. Furtherthe incremental NPAs also resulted in decline in incomes. As a result the yield ondomestic advances came down to 7.91% for FY 2017-18 as against 8.92% in the previous year.The domestic yield on investments improved to 7.77% for the whole year 2017-18 compared to7.36% in 2016-17. The Bank was able to maintain the global Net interest margin at 2.19% in2017-18 as against 2.03% in 2016 - 17. The Bank maintained a Provision Coverage Ratio of59.45 % for FY 2017-18 as against 53.63% for FY 2016-17.

Capital Raised during 2017-18

The Bank issued 397830018 equity shares of Rs.10/- each for cash at issue price ofRs.27.65 per equity share (including premium of Rs.17.65 per equity share) aggregatingupto Rs.1100 crores to Government of India on Preferential Basis on 31.08.2017 for thecapital infusion received from Government of India on 16.03.2017 and 2038211029 equityshares of Rs.10/- each for cash at issue price of Rs.23.03 per equity share (includingpremium of Rs.13.03 per equity share) aggregating upto Rs.4694 crores to Government ofIndia on Preferential Basis on 28.03.2018. Hence the paid-up capital of the Bank hasincreased from Rs.2454.73 crores to Rs. 4890.77 crores. The shareholding of Governmentof India has increased from Rs.1953.04 crores (79.56%) to Rs.4389.08 crores (89.74%)and the Public shareholding stood at Rs.501.69 crores (presently 10.26%).

Set off of Share Premium Account as on 31.03.2017 as against the accumulated losses ason 31.03.2017

The Bank had after obtaining the approval of the shareholders by way of a SpecialResolution at the EGM held on 30.01.2018 for utilizing the balance available in the SharePremium account as at 31.03.2017 to set off the accumulated losses as at 31.03.2017 so asto present a true and fair picture of the state of affairs of the Bank utilised an amountof Rs.6978.94 crores out of an amount of Rs. 7650.06 crores standing to the credit ofShare Premium account as at 31.03.2017 to set off the accumulated losses of Rs. 6978.94crores as at 31.03.2017 and the Share Premium account and accumulated losses stand reducedaccordingly.

Authorised Capital

As on 31st March 2018 the Authorized Capital of the Bank is Rs. 10000 crores whichwas increased from Rs.3000 crores vide GOI notification dated 27th Feb 2017.

Capital Adequacy Ratio

The Bank's capital adequacy ratio as on 31st March 2018 stood at 9.25 % as per BaselIII norms.

Branch Network

As on 31st March 2018 the Bank had 3332 domestic branches as against 3373 branchesas on 31st March 2017 comprising of 922 rural branches (27.67%) 990 Semi Urban branches(29.71%) 678 Urban branches (20.35%) and 742 Metropolitan branches (22.27%). Besides theBank has 7 Zonal Offices 48 Regional Offices 4 Extension Counters 20 Satellite Offices3 City Back Offices and 6 Inspectorates. During the year under review the Bank has closed41 branches and one Regional Office with a view to rationalize administrative costs.

Corporate Governance

Corporate Governance re ects the built in value system of the Bank in conducting itsday to day affairs. The Bank recognizes the critical importance of effective CorporateGovernance for the safe and sound functioning of the Bank and lays emphasis on ensuringthat structures processes and systems are put in place to establish strategic objectivesto serve the interest of the Bank and its stakeholders and which also facilitate effectivemonitoring.

IOB – Code of Conduct for Prohibition of Insider Trading 2015

Pursuant to Regulation 9 of Securities and Exchange Board of India (Prohibition ofInsider Trading) Regulations 2015 the Bank has formulated IOB Code of Conduct forProhibition of Insider Trading 2015 to regulate monitor and report trading by theDirectors employees and other connected persons of the Bank with a view to comply withthe provisions of the Regulations.

Securities and Exchange Board of India - Listing Obligations and DisclosureRequirements Regulations 2015 (LODR)

As per SEBI (LODR)

• The Bank is providing remote e-voting facility to its shareholders in allAnnual General Meetings/ Extraordinary General Meetings.

• The Code of Conduct is applicable to all members of the Board and the SeniorManagement (i.e. General Managers of the Bank).

• The Bank is submitting a quarterly compliance report on Corporate Governance tothe Audit Committee of the Board and to BSE & NSE where the shares of the Bank arelisted.

• The Bank is also submitting Quarterly Investor Grievance Report to BSE &NSE.

Investor Education & Protection Fund (IEPF)

As per the guidelines of Ministry of Corporate Affairs (MCA) Government of India theBank transferred Unpaid Dividend amount pertaining to the year 2009-10 to IEPF on27.10.2017. The unpaid dividend data pertaining to the years 2010-11 to 2013-14 is portedin MCA website and is also available at www.iob.in. Accordingly the Bank has compliedwith the guidelines of Government of India in respect of transfer of unpaid dividend toIEPF. Bank is complying with all guidelines/regulations laid down by the RegulatoryAuthorities and Government of India from time to time. The Bank redresses theshareholders' grievances without any delay.

Board of Directors

Shri Niranjan Kumar Agarwal Shareholder Director completed his three years' term on07.12.2017. Shri Sanjay Rungta Shareholder Director completed his three years' term on07.12.2017.

Shri R. Subramaniakumar has been appointed as Managing Director & Chief ExecutiveOfficer of the Bank from 05.05.2017 to 30.06.2019. Previously he was appointed asExecutive Director with effect from 29.09.2016. He was entrusted with the additionalcharge of MD & CEO for a period of 3 months from 11th November 2016 to 10th February2017 and for a period of another 3 months from 28th February 2017 to 27th May 2017. ShriAjay Kumar Srivastava has been appointed as Executive Director of the Bank from 09.10.2017to 08.10.2020. Shri Sanjay Rungta has been re-elected as Shareholder Director of the Bankfrom 08.12.2017 to 07.12.2020. Shri Navin Prakash Sinha has been elected as ShareholderDirector of the Bank from 08.12.2017 to 07.12.2020. Shri Sivaraman Anant Narayan has beenappointed as Non-Official Director of the Bank from 27.12.2017 to 26.12.2020.

Acknowledgement

The Board of Directors are grateful for the valuable guidance and support received fromthe Government of India Reserve Bank of India Securities and Exchange Board of India(SEBI) Stock Exchanges State Governments Financial Institutions and all OverseasRegulators. The Board of Directors acknowledge with thanks the valued Customers EmployeesUnion Officers Association domestic and international banking group the shareholders& other stake holders for their valued support and continued patronage with the Bank.

The Board also wishes to place on record its profound appreciation for the valuablecontribution of the Bank's Staff at all levels and looks forward to their continuedinvolvement with commitment towards achieving the future goals.

For and on behalf of the Board of Directors
Chennai (R. SUBRAMANIAKUMAR)
29th May 2018 Managing Director & Chief Executive Officer