Tag: iob

IOB stays on strong profit curve

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Public sector lender Indian Overseas Bank (IOB), which came out of RBI’s PCA framework last month, continues to maintain its profitable growth curve and is working out mid-term plans for branch-cum-manpower expansion

“Since the bank is now allowed to resume its expansion activities, IOB is likely to hire 100 officers and 70 clerks. We are redrawing our manpower policy based on the digitalisation policy. The bank may open 30-40 new branches next fiscal even as we would continue with branch rationalisation exercise. We will come out with our mid-term plan soon,” said Partha Pratim Sengupta, MD & CEO of the bank.

Doubled net profit

Meanwhile, the bank more than doubled its net profit to ₹376 crore for the quarter ended September 30 against ₹148 crore in the same period a year ago, helped by lower provisions.

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The bank’s operating profit grew 5 per cent to ₹1,419 crore against ₹1,346 crore on account of reduction in interest expenditure and higher non-interest income.

Falling interest income

Total income stood at ₹5,376 crore against to ₹5,431 crore. Interest income fell to ₹4,254 crore from ₹4,363 crore while non-interest income was higher at ₹1,121 crore (₹1,068 crore). Net interest margin was lower at 2.43 per cent (2.57 per cent).

“The industry has become more competitive. Almost all bigger banks have reduced their interest rates. So, in this competitive scenario, we need to match the same level. However, our strategy will now be to boost other income to make up for the above,” said Sengupta.

Lower provisions

Total provisions were lower at ₹1,036 crore (₹1,193 crore). Slippages were at about ₹1,400 crore, of which three accounts — including an NBFC — contributed 60–70 per cent.

Also see: Cash is still ‘King’ as digital divide between Bharat and India continues

“These three accounts were known to us and booked as NPA two quarters ago. But, because of the stay in the Court none of the banks could do it. The stay was vacated during the September quarter and we have booked it as NPA. It will not impact the balance sheet as we started doing the provisions right from the day, we identified the stress. As on date, we have provided almost 80 per cent for that account,” he added.

Lower NPA ratios

Gross NPA ratio fell to 10.66 per cent from 13.04 per cent in the same quarter a year ago and 11.48 in the preceding quarter. Net NPA ratio stood at 2.77 per cent, down from 4.30 per cent in Q2FY21 and 3.15 per cent in Q1FY22. Its provision coverage ratio improved to 92 per cent from 91.56 per cent in the preceding quarter.

Deposits increased to ₹250,890 crore in Q2FY22 against ₹242,941 crore in the year-ago quarter while gross advances stood at ₹1,46,940 crore (₹1,35,469 crore).

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After 6 years, we are in for fresh start, says Partha Pratim Sengupta, MD & CEO of Indian Overseas Bank| INTERVIEW

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Indian Overseas Bank (IOB), which recently came out of the prompt corrective action (PCA) by the RBI, says it will chalk out strategies to accelerate growth. Partha Pratim Sengupta, MD & CEO, says since some earlier curbs have been done away with, the bank will be looking at expanding branches or restructuring some of them. Excerpts from his virtual interaction with the media:

What are the bank’s plans post exiting the PCA?

After being in PCA for almost six years, we are now looking for a fresh start to grow more in the coming quarters and definitely the bank would be much stronger in future. Since the restrictions on branch opening, recruitment of human resources and CSR activities have been removed, we will look at taking actions on those fronts. There has been no recruitment in the past six years, and the bank’s staff strength came down to around 22,000 from 28,000. In a couple of months, we will be revamping our branch expansion and recruitment policies.

What were the factors that contributed to the good performance in the second quarter?

It has been an overall growth, I won’t say a particular segment has given growth. It has been equitably distributed among retail, agri, MSME and corporate segments. If you  look at the performances of the past quarters, we have been steadily growing. Due to the Covid-19 impact, the economic growth of the country got muted and hence there was no scope for credit growth on the bank side. But post the vaccination drive, we are seeing positive outlook on the economic front.
Your net interest margin (NIM) declined during this quarter.

NIM, on a q-o-q basis has gone up, but yes, on a y-o-y basis, it has declined to 2.43% from 2.57. In the June quarter, our NIM was at 2.34%. If you look at the interest rates, almost all the bigger banks have reduced the interest rates.

What were the slippages during the second quarter? Any plans to raise capital?

We had a slippage of Rs 1,400 crore, contributed by two to three companies. Out of it, 60 to 70% was borne out of an NBFC. The bank had made around 80% provisions on these accounts. The bank is not anticipating any major slippages in the coming quarters, whatever slippages had happened were from the watch list. On the capital front, the bank would be raising up to Rs 1,000 crore during Q4 to meet tier-II capital norms.

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Indian Overseas Bank shares jump 20% as RBI removes it from PCA framework

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Shares of Indian Overseas Bank on Thursday jumped 20 per cent after the Reserve Bank removed it from the Prompt Corrective Action Framework (PCAF).

The stock zoomed 20 per cent to ₹24.60 on the BSE. At the NSE, it gained 19.80 per cent to ₹24.50.

The Reserve Bank on Wednesday removed Indian Overseas Bank from the Prompt Corrective Action Framework (PCAF), following improvement in various parameters and a written commitment that the state-owned lender will comply with the minimum capital norms.

On a review of the performance of the IOB, the Board for Financial Supervision on the basis of the published financial results for 2020-21, found that the bank was not in breach of the PCA parameter, the RBI said in a statement.

Also read: IOB’s profitable march: Asset quality improves further in Q1

The bank has provided a written commitment that it would comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage ratio on an ongoing basis, it added.

The lender has also apprised the RBI of the structural and systemic improvements that it has put in place, which would help the bank in continuing to meet these commitments. “Taking all the above into consideration, it has been decided that Indian Overseas Bank is taken out of the PCA restrictions subject to certain conditions and continuous monitoring,” the central bank added.

IOB was placed under PCA in 2015.

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RBI lifts PCA curbs on Indian Overseas Bank, BFSI News, ET BFSI

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The Reserve Bank of India today lifted Prompt Corrective Action restrictions from the Indian Overseas Bank, the central bank said in a release.

The decision came after the bank reported its earnings for the year ended March 31, 2021, and the RBI observed that IOB was not in breach of the PCA parameters.

IOB has also provided a written commitment that it would comply with the norms of Minimum Regulatory Capital, Net NPA and Leverage ratio on an ongoing basis and has said that it would make structural and systemic improvements, RBI said in the release.

The RBI has said that it will continue monitoring the bank.

PCA is triggered when banks breach regulatory norms such as return on asset, minimum capital, among others.

Earlier this month, RBI had lifted PCA restrictions on UCO Bank. Now, only Central Bank of India remains in the list.



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IOB asks Union Bank to buy its stake in Malaysian bank, BFSI News, ET BFSI

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Indian Overseas Bank (IOB) has asked the Union Bank of India to buy its 35 per cent holding in India International Bank, Malaysia, a top IOB official said on Tuesday.

The India International Bank was originally a three-way joint venture between the Bank of Baroda (40 per cent stake), the IOB (35 per cent) and Andhra Bank (25 per cent). The Andhra Bank was taken over by the Union Bank of India as a part of the megabank merger scheme last year.

“We have asked Union Bank of India to buy our stakes. The valuation exercise is going on,” IOB Managing Director & CEO Partha Pratim Sengupta told reporters.

According to him, the IOB had decided to exit the Malaysian joint venture as part of its plan to come out of the Reserve Bank of India‘s (RBI) Prompt and Corrective Action (PCA) fold.

Though Sengupta said the IOB is expecting to be out of the PCA fold as it fulfills the RBI’s conditions, the decision to exit the India International Bank continues to hold.

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IOB asks Union Bank to buy its stake in Malaysian bank, BFSI News, ET BFSI

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Indian Overseas Bank (IOB) has asked the Union Bank of India to buy its 35 per cent holding in India International Bank, Malaysia, a top IOB official said on Tuesday.

The India International Bank was originally a three-way joint venture between the Bank of Baroda (40 per cent stake), the IOB (35 per cent) and Andhra Bank (25 per cent). The Andhra Bank was taken over by the Union Bank of India as a part of the megabank merger scheme last year.

“We have asked Union Bank of India to buy our stakes. The valuation exercise is going on,” IOB Managing Director & CEO Partha Pratim Sengupta told reporters.

According to him, the IOB had decided to exit the Malaysian joint venture as part of its plan to come out of the Reserve Bank of India‘s (RBI) Prompt and Corrective Action (PCA) fold.

Though Sengupta said the IOB is expecting to be out of the PCA fold as it fulfills the RBI’s conditions, the decision to exit the India International Bank continues to hold.

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Indian Overseas Bank profit doubles to Rs 327 cr in Q1, BFSI News, ET BFSI

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New Delhi: State-owned Indian Overseas Bank on Tuesday reported over two-fold jump in its net profit to Rs 327 crore for the quarter ending June as provisions for bad loans declined. The bank had posted a net profit of Rs 121 crore in the year-ago quarter.

Total income during Q1FY22, however, was down at Rs 5,155 crore as against Rs 5,234 crore in Q1FY21, Indian Overseas Bank said in a regulatory filing.

The interest income was down by 5.6 per cent at Rs 4,063 crore during the quarter. The non-interest income rose by 17.2 per cent at Rs 1,092 crore due to increase in other income, the bank said.

The Chennai-headquartered lender said it reduced non-performing assets (NAPs) worth Rs 1,616 crore during the quarter, as against Rs 1,969 crore in June 2020 quarter.

Bank’s gross NPAs (bad loans) fell to 11.48 per cent of the gross advances as of June 30, 2021, against 13.90 per cent in the year-ago period.

In terms of value, the gross NPAs were worth Rs 15,952 crore, down from Rs 18,291 crore. Net NPAs fell to 3.15 per cent (Rs 3,998 crore) from 5.10 per cent (Rs 6,081 crore).

Provisions for bad loans and contingencies for the quarter fell to Rs 868 crore from Rs 969.52 crore a year ago.

“The bank plans to come out of prompt corrective action (PCA) by focussing on recovery, low-cost deposits and less capital consuming advances,” it said.

The provision coverage ratio recorded at 91.56 per cent, it added.

Shares of the bank traded 2.7 per cent down at Rs 23.40 apiece on BSE. PTI KPM MR MR



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IOB’s profitable march: Asset quality improves further in Q1

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Indian Overseas Bank (IOB) continued its profitable growth journey as the Chennai-headquartered public sector bank reported a net profit of ₹327 crore for the quarter ended June 30, 2021 compared to a net profit of ₹121 crore in the year-ago quarter, helped by higher operating profit and lower provisions. The bank’s operating profit grew to ₹1,202 crore in June 2021 quarter as against ₹1,094 crore in the corresponding period last year, on account of reduction in interest expenditure and higher non-interest income.

Drop in income

Total income stood at ₹5,155 crore as compared to ₹5,234 crore. Interest income fell to ₹4,063 crore (₹4302 crore in Q1 of last fiscal), while non-interest income was higher at ₹1,092 crore (₹932 crore).

Provisions and contingencies were lower at ₹868 crore (₹970 crore). Slippages stood at ₹1,159 crore during Q1 of this fiscal.

“Some slippages are sudden due to the impact of second wave as cash flow was affected. However, cash recoveries are also higher. We recovered ₹1,125 crore in Q1. With better recoveries and provisioning coverage ratio, we don’t expect any impact on profitability if there are some unexpected slippages in the coming quarters,” said Partha Pratim Sengupta, MD & CEO of the bank.

Gross NPA declined to ₹15,952 crore as of June 2021 quarter when compared with ₹18,291 crore in June 2020 quarter and ₹16,323 crore in March 2021 quarter. Gross NPA ratio fell to 11.48 per cent from 13.90 per cent in the year-ago quarter and 11.69 in the year-ago quarter. Net NPA ratio stood at 3.15 per cent, down from 5.10 per cent in Q1 of last fiscal and 3.58 per cent in Q4 of FY20.

Also read: The turnaround story of Indian Overseas Bank

Its provision coverage ratio improved to 91.56 per cent from 87.97 per cent in the June 2020 quarter and 90.34 per cent in March 2021 quarter. IOB hopes to recover about ₹4,500 crore during this fiscal and of which it has already recovered ₹1,100 crore in the first quarter. “The bank’s request to move out PCA (Prompt Corrective Action) framework is under consideration by RBI and we have answered all queries relating to this. RBI will be looking at other aspects to take a call,” added Sengupta.

Deposits increased to ₹2,42,941 crore in Q1 of this fiscal when compared to ₹2,25,546 crore in year-ago quarter, while gross advances stood at ₹1,38,944 crore as compared to ₹1,31,565 crore. IOB will also be focusing on growth in advances this fiscal. It will focus on lending to select corporates in addition to traditional segments. “Our capital position is also comfortable as of now,” he added.

The bank has restructured ₹4,400 crore worth of accounts and expects another ₹3,000 crore worth of restructuring in the coming quarters.

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IOB asks Union Bank to buy its stake in Malaysian bank, BFSI News, ET BFSI

Banking & Finance

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Indian Overseas Bank (IOB) has asked the Union Bank of India to buy its 35 per cent holding in India International Bank, Malaysia, a top IOB official said on Tuesday.

The India International Bank was originally a three-way joint venture between the Bank of Baroda (40 per cent stake), the IOB (35 per cent) and Andhra Bank (25 per cent). The Andhra Bank was taken over by the Union Bank of India as a part of the megabank merger scheme last year.

“We have asked Union Bank of India to buy our stakes. The valuation exercise is going on,” IOB Managing Director & CEO Partha Pratim Sengupta told reporters.

According to him, the IOB had decided to exit the Malaysian joint venture as part of its plan to come out of the Reserve Bank of India‘s (RBI) Prompt and Corrective Action (PCA) fold.

Though Sengupta said the IOB is expecting to be out of the PCA fold as it fulfills the RBI’s conditions, the decision to exit the India International Bank continues to hold.

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