Indian Overseas Bank posts net profit of Rs 121 crore in Q1

Chennai-headquartered public sector lender Indian Overseas Bank (IOB) on Thursday reported a net profit of Rs 121 crore for the first quarter of FY21. It had reported a net loss of Rs 342.08 crore in the year-ago period. Total income for the quarter increased to Rs 5, 234 crore from Rs 5,006.48 crore.

Speaking to media persons through a virtual press conference, Partha Pratim Sengupta, MD & CEO of IOB, said treasury gain, increase in interest on investments and reduction in interest expenditure on deposits have helped the bank to report profit in the first quarter of FY21. The bank had bounced back to black in the last quarter (Q4 of FY’20) after being in the red for almost 18 quarters.

“Despite Covid situation, the bank was able to maintain the good results of last quarter sequentially. Now, being in profit for the two quarters in a row and NPAs having come down drastically, we qualify enough to come out of the Prompt Corrective Action (PCA). Though we are not in a hurry, our board will discuss the matter to see whether it can be sustained and we will wait for one more quarter before approaching the RBI for getting the PCA revoked,” he said.

The asset quality of the bank has improved, with gross NPA decreasing to Rs 18,291 crore with ratio of 13.90%, against Rs 33,262 crore with a ratio of 22.53%. The net NPA declined to Rs 6,081 crore with ratio of 5.10% as against Rs 14,174 crore with ratio of 11.04%. The reduction was Rs 8,093 crore in absolute terms.

The total recovery achieved was to the tune of of Rs 1,991 crore as against the recovery of Rs 2, 238 crore. The provision coverage ratio has improved to 87.97% as against 72.24% in the year-ago period.

Sengupta said due to Covid pandemic, the bank could not achieve recovery target in Q1. In the remaining three quarters of the current fiscal, the bank is targeting to recover at least Rs 1,000 crore per quarter. “The bank has put on hold the process of monetising some of its real estate NPA assets because of Covid –induced market conditions. We will do it when the prices go up once the economy revives,” he said.

On the priorities of the bank, he said it will focus on MSME lending rather than going in for large corporate advances. “We will be focusing on recovery and arresting of fresh slippages,” Sengupta said.

The bank will seek shareholders nod to raise additional capital at its next annual general body meeting. “ If we have to grow the book, we require additional capital,” he added.