Indian Overseas Bank(IOB) Q2 turns around to profits on lower provisioning

State-owned Indian Overseas Bank (IOB) on November 6 reported a net profit of Rs 148 crore for the second quarter of current fiscal as bad loans and provisions declined.

The Chennai-headquartered lender had registered a net loss of Rs 2,254 crore in July-September quarter a year ago. Sequentially, net profit grew 22.3 percent from Rs 121 crore in June quarter of this fiscal.

Total income rose 8.1 percent to Rs 5,431 crore during the quarter under review as against Rs 5,024 crore in the same quarter of 2019-20, Indian Overseas Bank (IOB) said in a regulatory filing. Interest income increased to Rs 4,363 crore from Rs 4,276 crore a year ago.

There was a substantial improvement in bank's asset quality as the gross non-performing assets (NPAs) plunged to 13.04 percent of the gross advances as of September 30, 2020 from 20 percent at the end of September 2019. In value terms, gross NPAs or bad loans fell to Rs 17,659.63 crore as against Rs 28,673.95 crore a year ago.

Net NPAs reduced to 4.30 percent (Rs 5,290.60 crore) from 9.84 percent (Rs 12,507.97 crore) a year ago. Total fresh slippages (other debits to existing NPA accounts) for September quarter were contained at Rs 292 crore, the lender said.

"Total cash recovery for September 2020 was Rs 513 crore (including cash recovery) as against Rs 172 crore in June 2020," it said.

Provisions for bad loans and contingencies fell to Rs 1,192.55 crore during the quarter under review from Rs 2,996.04 crore set aside in the year-ago quarter.

IOB said it has made required provisioning in advances in specific accounts so as to improve net NPAs. The bank's gross advances fell to Rs 1,35,469 crore as of September 30, 2020 from Rs 1,43,350 crore a year ago. However, it was slightly higher from Rs 1,31,565 crore at the end of June 2020.

"The bank has evolved a policy of not taking fresh exposures in stressed sectors, below hurdle rated accounts and BB and below rated accounts. The bank has also exited from accounts in the stressed sectors, wherever feasible," it said. The bank has grown under retail and agri sector and re-balanced the advance balance by consciously reducing the stressed sector in corporate segment, it added.

Provision coverage ratio improved to 89.36 percent at the end of September 2020 as against 75.85 percent at the end of September 2019. IOB's average cost of deposit reduced to 4.89 percent from 5.41 percent, while net interest margin improved to 2.18 percent for the quarter as against 1.86 percent in the year-ago period.

The bank said on relaxation of COVID-19 related lockdowns, it started mega e-auction process pan-India for sale of properties. The first such e-auction was conducted, fetching countable recovery by sale of properties and such e-auctions are planned to be conducted every month like in 2019-20, IOB said.

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Indian Overseas Bank(IOB) reports net profit in Q1

Indian Overseas Bank on Thursday posted a net profit of Rs 121 crore for June quarter 2020 mainly due to fall in bad loans. The state-owned lender posted a net loss of Rs 342.08 crore for the same quarter a year ago.

In March quarter, the bank had a profit of Rs 144 crore, Indian Overseas Bank said in a regulatory filing.

Total income of the bank during April-June 2020-21 rose to Rs 5,233.63 crore from Rs 5,006.48 crore in the same period of the previous fiscal, mainly due to increase in treasury income, it said.

Interest income stood at Rs 4,302 crore for the quarter as against Rs 4,336.39 crore a year ago mainly due to decrease in MCLR (marginal cost of funds based lending rate), it added.

Provisions and contingencies for the quarter were reduced to Rs 969.52 crore as against Rs 1,157.82 crore parked aside for the year- ago period, as the bad loan proportion of the bank came down significantly.

Gross non-performing assets (NPAs) were cut to 13.90 per cent of gross advances as on June 30, 2020 from 22.53 per cent by the same period of 2019. In value terms, gross NPAs or bad loans came down to Rs 18,290.84 crore from Rs 33,262 crore.

Likewise, net NPAs dipped to 5.10 per cent (Rs 6,080.89 crore) from 11.04 per cent (Rs 14,173.84 crore).

Total deposits increased to Rs 2.26 lakh crore as on June 30, 2020 as against Rs 2.21 lakh crore by June last year, it said. Total business was up at Rs 4.41 lakh crore from Rs 4.37 lakh crore.

Gross advances stood at Rs 1.32 lakh crore by June-end as against Rs 1.47 lakh crore by the year-ago same period, IOB said, adding the bank has evolved a policy of not taking fresh exposures in stressed sectors, below hurdle rated accounts and BB and below rated accounts.

"The bank has also exited from accounts in the stressed sectors to improve the quality of assets," said the Chennai-headquartered lender.

The net interest margin -- interest earned minus interest expended -- improved to 2.08 per cent from 2.01 per cent.

IOB said it made recovery of Rs 1,991 crore during June 2020 quarter as against recovery of Rs 2,238 crore a year ago and the total fresh slippage (other than debits to existing NPA accounts) for the quarter stood at Rs 257 crore.

Provision coverage ratio improved to 87.97 per cent from 72.24 per cent, it said.

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Privatization Of PSU Banks, Insurance Starts Soon

Privatization of the PSUs will now be resumed by the Government of India and about four unmerged banks and insurance companies will be privatized in the next part of the project.

The privatization of PSU Banks was postponed in 2020 due to the outbreak of the Coronavirus pandemic, which put the whole process on hold because of their low valuations and mounting stressed assets.

As per reports, Punjab & Sind Bank, IOB, Bank of Maharashtra might be privatized, along with state-run insurance companies, such as National Insurance Company, United India Insurance, and Oriental Insurance Company.

Prior to this, the Government had also sold their shares in the Bharat Petroleum Corp Ltd (BPCL), Shipping Corp of India (SCI), THDC India, and NEEPCO. The Govt also announced that it will also sell its 30% stake from the state run rail hauler Container Corp of India (Concor).

Recently, the Government of India had also announced economic reforms in wake of the Coronavirus pandemic, wherein it was declared that every PSU in India will be now privatized, except 4 in strategic sectors.

As per reports, a draft cabinet note has already been sent for inter-ministerial consultations to identity strategic and non-strategic sectors. 

A government official close to the development said, “A broader policy will look at sectors that have market imperfections due to the government’s presence, where the private sector can take the lead and ensure that the monopoly should not happen due to state-run companies.”

He also said that sectors like banks, insurance, space, defence will be privatized.

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Indian Overseas Bank(IOB) posts net profit in Q4

State-owned Indian Overseas Bank has booked net profit after 18 straight quarters while reported net non-performing below 6 percent for two consecutive quarters, making itself a contender to get out of Reserve Bank of India's prompt corrective action (PCA) framework, which puts restrictions on lending, branch expansion and dividend distribution.

IOB's net profit was at Rs 144 crore in the quarter to March compared with Rs 199 crore net loss in the year ago period.

"Making profit will not be a one-off thing. This is going to be sustainable," IOB chief executive Karnam Sekar said after the release of the bank's quarterly earnings. He said that provision coverage ratio was at 87 percent at the end of the reporting period March from 71 percent a year back, and therefore future provision requirement would come down.

Sekar is slated to hang up his boots at the end of June while State Bank of India's deputy managing director Partha Pratim Sengupta's is tipped to succeed him.

The bank's operating profit marginally rose to Rs 1144 crore compared with Rs 1132 crore in period under review while steep fall in provisioning to Rs 1060 crore from 4502 crore helped the bank to be back in black.

Its gross advances shrunk to Rs 1.35 lakh crore at the end of March against Rs 1,52 lakh crore a year back, The CEO said that its lending very selectively and not taking fresh exposures in stressed sectors.

"The situation continues lo be uncertain and the bank ls closely monitoring the situation," the bank said in its regulatory filing to stock exchanges.

Its gross NPA ratio improved to 14.78 percent as on March, down from 17.12 percent a quarter back while the net ratio improved further to 5.44 percent from 5.81 percent in the same period.

IOB has restructured 19043 MSME accounts and treated them as standard assets aggregating to Rs 694 crore as on Morch 31. It has also made an adhoc provision of Rs 460 crore towards revision of wages which is due since November 2017.

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Indian Overseas Bank(IOB) Q4 loss narrows

Indian Overseas Bank(IOB) Thursday reported narrowing of net loss to Rs 1,985.16 crore for the March quarter of the previous fiscal due to reduction in bad loans and provisioning.

The public sector lender reported a loss of Rs 3,606.73 crore during January-March, 2017-18.

During December quarter of the last fiscal, the bank's loss stood at Rs 346.02 crore.

"Net loss is only due to additional provision in the existing NPA to the tune of Rs 1,400 crore and one fraud account provision to the extent of Rs 700 crore," the bank said.

Total income during the quarter was down at Rs 5,473.92 crore from Rs 5,814.42 crore in the year-ago period, the bank said in a regulatory filing.

For 2018-19, the net loss was down at Rs 3,737.88 crore from Rs 6,299.49 crore during 2017-18. Income was slightly higher at Rs 21,837.58 crore from Rs 21,661.65 crore a year ago.

Gross non-performing assets (NPAs) of the bank came down to 21.97 per cent (Rs 33,398.12 crore) of the gross advances by end of March 2019 as against 25.58 per cent (Rs 38,180.15 crore) at March-end 2018.

Net NPAs were 10.81 per cent (Rs 14,368.30 crore) as against 15.33 per cent (Rs 20,399.66 crore).

Thus, provisioning and contingencies for the March quarter 2019 were reduced to Rs 4,501.92 crore from Rs 6,774.55 crore a year ago.

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Indian Overseas Bank Q3 net loss widens on higher bad loan provisioning

Indian Overseas Bank (IOB) on Monday reported a standalone loss of Rs 6,075.49 crore for the quarter ended December 31. The public sector lender had posted a loss of Rs 346.02 crore in the same period last year.

The bank kept aside Rs 6,663.94 as provisions for bad loans in the quarter, which hit its bottom line. The number stood at Rs 2,075 crore in the year-ago period.

Operating profit stood at Rs 762.35 crore against Rs 1,466.15 crore for the quarter ended December 31, 2018.

Total income of IOB during the quarter came in at Rs 5,197.95 crore while interest income stood at Rs 2,867.66 crore.

Gross NPA ratio slid to 17.12 per cent against 23.76 per cent last year. Net NPA saw an improvement of 775 basis points, as it eased to 5.81 per cent from 13.56 per cent.

The lender said its provision coverage ratio improved to 86.20 per cent during the quarter against 64.23 per cent in the year-ago period.

Fresh slippages were at Rs 1,647.82 crore while recovery was at Rs 7,085.04 crore.

The bank said it has evolved a policy of not taking fresh exposures in stressed sectors, below hurdle rated accounts and ‘BB’ and below rated accounts. The bonk has also exited from accounts in the stressed sectors, wherever feasible.

Due to this, gross advances came down to Rs 1,38,643 crore in the December quarter from Rs 1,50,590 crore in the same quarter last year.

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These PSU Banks to get Rs.8,655 crore for preferential allotment

The government has approved releasing Rs.8,655 crore to three public sector lenders -- Allahabad Bank, Indian Overseas Bank (IOB) and UCO Bank -- for preferential allotment of shares.

The Ministry of Finance has approved infusing fresh capital amounting to Rs.2,153 crore in Allahabad Bank, Rs.2,142 crore in UCO Bank and Rs.4,630 crore in IOB via for preferential allotment of shares.

Fresh capital infusion by the government is a part of the announcement made by Finance Minister Nirmala Sitharaman, in her maiden Budget on 5 July.

Sitharaman had first proposed a capital infusion Rs.70,000 crore in public-sector banks in two phases. First, banks were to subscribe to bonds floated by the government and in the second phase, the government was to infuse the money into these banks.

As of 20 November, the government had infused Rs.60,314 crore in public-sector banks of the total of Rs.70,000 crore that was announced for these banks.

At 12.16pm, the shares of Allahabad Bank were nearly 8% up at Rs.19.15 apiece. Shares of UCO Bank were higher by 3.6% and IOB nearly 9% at Rs.17.40 and Rs.12.25 , respectively.

All these three banks are currently under the Reserve Bank of India’s prompt corrective action (PCA) framework and their ability to exit the same will be driven by a reduction in net non-performing asset ratio to less than 6.0% and maintenance of capital conservation buffer, which further depends on the capital infusion by the government.

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Bank of India, IOB report NPA divergences; losses widen for FY19

State-owned Bank of India and Indian Overseas Bank have reported divergences in their bad loans for the fiscal ended March 2019, resulting into widening of net losses for the year.

Chennai-headquartered Indian Overseas Bank has reported a net non-performing asset (NPA) divergence of Rs 358 crore for 2018-19, due to which the divergence in provisioning came in at Rs 2,208 crore, according to a regulatory filing by the bank.

The bank has an adjusted loss of Rs 5,999.88 crore in the fiscal ended March 2019, higher than Rs 3,737.88 crore reported earlier, due to the divergence.

Banks have to report the divergence in asset classification and provisioning for NPAs as per Risk Assessment Report of RBI subject to certain conditions, which is the gap between the bad loans as declared by the lenders and that assessed by the regulator.

Bank of India on the other hand had a fall in its net NPA divergence by Rs 329 crore for 2018-19, because the NPAs reported by the bank were higher than that assessed by the RBI.

However, the lender's net loss for the year expanded to Rs 6,992.90 crore from Rs 5,546.90 crore reported by the bank due to divergence in provisioning requirement.

The bank's divergence in provisioning for the year was at Rs 1,446 crore, Bank of India said in the regulatory filing.

Earlier this month, market regulator Sebi had put in place tighter disclosure norms, and directed all listed banks to disclose any divergence in bad loan provisioning within 24 hours of receiving RBI's risk assessment report, rather than waiting to publish the details in their annual financial statements.

Some banks, including Indian Bank, Union Bank of India and Lakshmi Vilas Bank, have already reported their NPA divergences for last fiscal.

The disclosures need to be made in case the banks' additional provisioning for non-performing assets (NPAs) assessed by the RBI exceeds 10 per cent of the reported profit before provisions and contingencies, and if the additional gross NPAs identified by the RBI exceed 15 per cent of the published incremental gross NPAs.

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