The Hindu Business Line : IOB second quarter net profit halves to Rs 176 cr

Chennai, Oct. 29 Indian Overseas Bank has reported a 50 per cent fall in its net profit for the July-September period of the current year. Its net slid to Rs 176 crore, compared with Rs 359 crore in the corresponding period of last year, despite a ten-fold increase in treasury profit (Rs 150 crore) for the period under review.

The fall was mainly due to two reasons. First, the bank had to absorb Rs 82 crore of excess liabilities (liabilities over assets) of Shree Suvarna Bank, a Maharashtra-based bank it took over recently. Second, in the comparable quarter of last year, the bank had an exceptional income of Rs 167 crore from two sources — a Rs 94 crore Income Tax refund and Rs 67 crore from sale of property.

Addressing a press conference Mr S.A. Bhat, Chairman and Managing Director, said that the bank has substantially brought down its cost of deposits from 6.7 per cent to 6.2 per cent by chopping its bulk deposits from Rs 17,000 crore to Rs 4,000 crore over the last six months.

He said that the bank had pitched for Rs 1,000 crore of loans from the funds given to the Government by the World Bank for recapitalising the bank.

The bank’s gross NPAs stood at Rs 2,685 crore, including Rs 203 crore that came through the acquisition of Shree Suvarna Bank. Analysts have estimated that IOB would have to set aside Rs 500 crore to meet the RBI’s norm that at least 70 per cent of bank’s delinquent loans should be covered by provisions. IOB has an NPA coverage of 52 per cent. Asked about this, Mr Bhat said banks are talking to the RBI for a re-think on the norm.

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