IOB posts lower net profit at Rs 102 crore
Indian Overseas Bank has recorded a decline of 73.81% in net profit to Rs 101.70 crore for the third quarter of the current financial year against 388.44 crore recorded in the same period last year. The decline is mainly due to provisioning for bad debts, wage settlement and a fall in treasury profits.
The operating profit for IOB in the third quarter declined by 50% to Rs 406.09 crore from Rs 867.73 crore in the year-ago period mainly due to losses faced on the sale of securities. The treasury income stood at Rs 17 crore in the quarter down by Rs 345 crore from Rs 362 crore in third quarter of 2008.
The bank also recorded an increase in its non-performing assets. In the first nine months of the current financial year, the bank added about Rs 1,000 crore of bad debts. Out of which infrastructure and educational institutions recorded for Rs 444 crore, priority sector for Rs 165 crore and trade finance and real estate sector each recorded Rs
200 crore.
The net NPA at the end of December 2009 was at Rs 1,690 crore as against Rs 920 crore a year back. While the gross NPA was at was Rs 3,218 crore. The bank's net interest margins in the third quarter stood at 2.69% compared to 2.94% in the year-ago period and 2.73% in the previous quarter.
Analysts say that that high NPA's with the bank is putting pressure on its revenues. The bank had earlier said that it is planning for restructuring assets worth Rs 8,200 crore. However, only 1% of NPAs were from this pool, indicated the Chairman and Managing Director, Mr S. A Bhat.
As for restructuring plans Mr. Bhat said, "We haven't yet started talking to asset restructuring companies but we are planning to sell at least 15-20% of NPAs."
The bank's total business in the quarter stood at Rs 1, 85,656 crore, up by 14.20% from Rs 1, 62,575 crore a year back. Deposits rose 16.93% at Rs 1,06,249 crore and total advances and were up 10.74% at Rs 79,408 crore.
The CAR of the bank stood at 14.64%. The bank is looking at increasing its ratio from 29.95% to at least 32% by the end of the current financial year.
