The Hindu : Business : IOB Q3 net rises to Rs. 161 crores

Online edition of India's National Newspaper
Tuesday, Jan 25, 2005

Business

Business

IOB Q3 net rises to Rs. 161 crores

By Our Special Correspondent

CHENNAI, JAN. 24. Indian Overseas Bank (IOB) today reported a net profit of Rs.161.21crores for the third quarter ended December 2004, up from Rs.142.01crores in the corresponding quarter last year. The net profit for the nine-month period ended December 2004 stood at Rs. 494.14 crores (Rs. 435.41crores). This jump in 9-month net profit must be seen in the backdrop of a substantial provision for non-performing assets and taxation. A provision of Rs. 260 crores had been made for taxation during the 9-month period (Rs. 187 crores). The net interest income earned for the nine-month period had gone up to Rs. 1,377crores, up by Rs. 208 crores over the same period last year.

Almost all numbers have shown improvement in the quarter under review compared to the same period last year. The capital adequacy ratio had improved to 13.90 per cent (13.21 per cent), the gross NPAs to 5.61 per cent (8.26 per cent) and the net NPA to 1.57 per cent (3.83 per cent). The bank was able to reduce the cost of deposits to 4.90 per cent from 5.57 per cent in March 2004 by focussing on low cost deposits, which comprised 37 per cent. S.C. Gupta, Chairman and Managing Director, said a further reduction in cost of deposits was well nigh difficult to achieve in view of the fact that deposit rates had been falling in the past few years. With competition turning hotter on the lending front, the Chairman said, profitability was under pressure. Nevertheless, he said IOB would rely on credit volume growth to maintain the profitability.

To a question, Mr. Gupta said IOB was comfortably placed vis-à-vis capital to meet the Basel II standards. "We have covered our operational and market risks and are comfortable for the next five to seven years,'' the Chairman said. To another query, he said the bank had recovered NPAs worth Rs. 187 crores during the nine-month period as against the target of Rs. 250 crores. He was confident that the bank would recover the targeted money for the current financial year.

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