Indian Overseas Bank net profit up 154%

State-run Indian Overseas Bank (IOB) has posted a 154 per cent increase in net profit during the second quarter of the current financial year ended on September 30 to Rs 376 crore, as compared to Rs 148 crore during the same quarter in 2020-21.

The lender's total income for the reporting quarter was down marginally by about 1 per cent to Rs 5,376 crore, from Rs 5,430 during the July to September quarter of 2020-21. The bank’s managing director and chief executive officer P P Sengupta said the reasons for the better financial numbers is owing to a better outlook in the economy due to higher rates of vaccination and better performance in retail, agriculture, MSME (RAM) and corporates.

The bank’s asset quality showed signs of improvement with its gross non-performing assets falling by 11.29 per cent from Rs 17,660 crore during the second quarter in 2020-21 to Rs 15,666 during the same quarter this fiscal. During the quarter GNPA reduced by Rs 286 crore. GNPA ratios improved to 10.66 per cent from 13.64 per cent on a quarter on quarter basis. The bank came out of RBI's Prompt Corrective Action (PCA) on September 29, 2021.

Reduction in NPA for the quarter ended September 2021 stood at Rs. 1798 crore as against Rs.1,616 crore achieved for quarter ended June 2021. Net NPA during the quarter was seen at Rs 3,741 crore with a ratio of 2.77 per cent as against Rs 3,998 crore with a ratio of 3.15 per cent during the previous quarter.

The bank's net interest margin was 2.43 per cent in Q2 FY22, as against 2.57 per cent a year ago. During the quarter under review, IOB’s operating profit zoomed by 5.42 per cent to Rs 1,419 crore, as compared to Rs 1,346 crore seen during the September quarter last fiscal. Total deposits were seen up by 9 per cent to Rs.2,50,890 crore as on September end as compared to Rs 2,42,941 crore as on the quarter ended in June 2021.

Gross advances stood at Rs 1,46,940 crore during the quarter compared to Rs 1,38,944 crore during the end of Q1. The bank said that it has grown its retail and agri segments and rebalanced the advance balance by consciously reducing the stressed sector in the corporate segment.

CASA of the bank improved to 42.57 per cent during the period under review compared to 40.26 per cent during the same time last financial year. Total CASA also increased to Rs 106,806 crore as against Rs 92,436 crore during the second quarter of 2020-21. Provision Coverage Ratio improved to 92 per cent as against 89.36 per cent in Q2FY21.

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RBI removes PCA framework from this PSU bank

  

The Reserve Bank of India on September 29 announced that it has lifted the curbs on Indian Overseas Bank and taken the bank out of the Prompt Corrective Action (PCA) framework, the central bank said in a release.

The board for financial supervision reviewed the performance of Indian Overseas Bank and noted that as per its published results for year ended March 31, 2021, the bank is not in the breach of PCA parameters, RBI said.

Further the bank has provided a written commitment that it would commitment that it would comply with the norms of minimum regulatory capital norms, net NPA and leverage ratio on an ongoing basis, RBI said.

Taking all the above into consideration, it has been decided that Indian Overseas Bank is taken out of the PCA restrictions subject to certain conditions and continuous monitoring, RBI said.

RBI had brought Indian Overseas Bank under the PCA framework in October 2015. The bank had been requesting to the central bank to take it out of the PCA framework.

The bank's MD & CEO, Partha Pratim Sengupta had said post the Q4FY21 results that, “As far as all the PCA ratios are concerned, we have been achieving it in the past quarters also, barring one ratio, which is the leverage ratio. With the ploughing back of the profits and also with the infusion of funds by the government of India, we are very, very comfortable in all the parameters.”

Indian Overseas Bank had received Rs 4,100 crore from the government.

Under the PCA norms, the central bank imposes business restrictions on banks having weak financial metrics and the restrictions are decided on a case to case basis.

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Indian Overseas Bank(IOB) Q1 results: Net profit doubles as provisions decline

 

Chennai-based public sector lender Indian Overseas Bank (IOB) on Tuesday reported a 170% jump in its net profit to `327 crore for the first quarter of this fiscal as compared to Rs 121 crore in the corresponding quarter last fiscal.

The bank has attributed the growth in the bottom line to an increase in other income and a robust recovery during the quarter. The total income of the bank stood at Rs 5,155 crore as against Rs 5,234 crore in the corresponding period last year.

Speaking to media persons in a virtual interaction, Partha Pratim Sengupta, MD & CEO, IOB, said after making losses for 18 quarters, the bank has started making profits since the March 2020 quarter, and this quarter it added around Rs 200 crore to the profit. “We have been making profits and have fulfilled all the requirements to come out of the prompt corrective action. The regulator is examining as we have furnished all the details,” he said, adding that it is now for the RBI to take a call on it.

Interest income of the bank stood at Rs 4,063 crore for the quarter as against Rs 4,302 crore, while non-interest income was at Rs 1,092 crore as compared to Rs 932 crore due to increase in other income.

He said the bank could make a decent recovery in the first quarter despite the impact of the second wave of the pandemic. “While fresh slippage was at Rs 1,158 crore, cash recovery was itself to the tune of Rs 1,130 crore, offsetting the impact of bad assets,” he said.

IOB’s gross NPAs stood at Rs 15,952 crore, with a ratio of 11.48% as against 18,291 crore with a ratio of 13.90%. It achieved a total reduction in NPAs of Rs 1,616 crore in Q1FY22 as against the NPA reduction of Rs 1,969 crore.

Net NPAs were at Rs 3,998 crore, with a ratio of 3.15% as against Rs 6,081 crore, with a ratio of 5.10%, a decline of Rs 2,083 crore in absolute terms. Provision coverage ratio improved to 91.36% from 87.97%.

Sengupta said the bank has approval to raise Rs 2,000 crore as tier I capital, Rs 1,000 crore as tier II bonds and will look to raise funds as and when required. “As of now, we are comfortably capitalised with CRAR of 15.48%. First we will try to raise the tier II bonds by November, and later on will decide when to go for tier I funds,” he said.

On the advances growth, he said the bank will go for an incremental increase of Rs 14,000 crore to Rs 15,000 crore, over the last year. “While retail, agri and MSME sector will be our focus area, corporate book needs to be also grown. Though we will be cautious, we will go for rated corporate entities,” he said.

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Government may shortlist two PSU banks for privatization

 The Centre has shortlisted Central Bank of India (CBI) and Indian Overseas Bank (IOB) for divestment.The two state-run banks might see 51 percent sale in the first phase of disinvestment.

The government will amend the Banking Regulations Act, and some other banking laws for divestment, the news channel reported.

Following the news, shares of CBI and IOB surged 20 percent on June 21.

The weak financial metrics of lenders like CBI and IOB could lead to unexpected hurdles in the government's plan to privatise the lenders, banking analysts.

Both the IOB and CBI are currently under the Prompt Corrective Action (PCA) framework imposed by the Reserve Bank of India (RBI). Under the PCA framework, the central bank imposes certain business restrictions on lenders with weak financial metrics.

The Centre has set an ambitious divestment target of Rs 1.75 lakh crore for FY22.

The government's plans to sell its stakes in Air India, Bharat Petroleum Corporation (BPCL), Shipping Corporation of India and some other companies have been disrupted due to the COVID-19 pandemic

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Indian Overseas Bank(IOB) Q4 profit jump over two times

 

State-owned Indian Overseas Bank (IOB) on Monday reported a jump of over two times in its net profit at Rs 349.77 crore in the last quarter of the fiscal ended March 2021.

The bank had posted a net profit of Rs 143.79 crore in the same period a year ago.

Total income during Q4FY21 rose to Rs 6,073.80 crore as against Rs 5,484.06 crore in Q4FY20, IOB said in a regulatory filing.

Provisions for bad loans and contingencies for the reported quarter increased to Rs 1,380.46 crore as against Rs 1,060.38 crore parked aside in the corresponding period a year earlier.

For the full year 2020-21, the bank reported a net profit of Rs 831.47 crore. There was a net loss of Rs 8,527.40 crore in 2019-20.

Total income during the year increased to Rs 22,524.55 crore from Rs 20,712.48 crore in the previous fiscal year.

Bank's asset quality showed improvement with the gross non-performing assets (NPAs) falling to 11.69 per cent of the gross advances as of March 31, 2021 from 14.78 per cent by year ago same period.

In value terms, the gross NPAs or bad loans were of the order of Rs 16,323.18 crore, down from Rs 19,912.70 crore.

Net NPAs fell to 3.58 per cent (Rs 4,577.59 crore) from 5.44 per cent (Rs 6,602.80 crore).

The bank said its board of directors has approved the capital plan for 2021-22 under which it will issue equity shares up to a maximum extent of 125 crore shares by way of follow on public offer/rights issue.

The issue may be with or without participation from the government or to qualified institutional buyers (QIBs), the lender said.

It may be also on a preferential basis to LIC and other insurance companies or mutual funds/QIBs. The issuance of shares is subject to shareholders approval, IOB said.

Besides, the board also approved to raise tier II capital by issuing Basel III compliant bonds up to Rs 1,000 crore in one or more tranches. The issue may be through a private placement or to retail segment by public issue, either domestically or overseas, it added.

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Government is considering mid-sized to small banks for its first round of privatisation.

Government has shortlisted four mid-sized state-run banks for privatization, under a new push to sell state assets and shore up government revenues, three government sources said.

Privatisation of the banking sector, which is dominated by state-run behemoths with hundreds of thousands of employees, is politically risky because it could put jobs at risk but Prime Minister Narendra Modi's administration aims to make a start with second-tier banks.

The four banks on the shortlist are Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India, two officials told Reuters on condition of anonymity as the matter is not yet public.

Two of those banks will be selected for sale in the 2021/2022 financial year which begins in April, the officials said. The shortlist has not previously been reported.

The government is considering mid-sized to small banks for its first round of privatisation to test the waters. In the coming years it could also look at some of the country's bigger banks, the officials said.

The government, however, will continue to hold a majority stake in India's largest lender State Bank of India, which is seen as a 'strategic bank' for implementing initiatives such as expanding rural credit.

A finance ministry spokesman declined to comment on the matter.

India's deepest economic contraction on record caused by the pandemic is driving the push for bolder reforms, economists say.

Government also wants to overhaul a banking sector reeling under a heavy load of non-performing assets, which are likely to rise further once banks are allowed to categorise loans that soured during the pandemic as bad.

PM Modi's office initially wanted four banks to be put up for sale in the coming fiscal year, but officials have advised caution fearing resistance from unions representing the employees.

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Indian Overseas Bank (IOB) reports net profit in Q3

Chennai-based public sector lender Indian Overseas Bank (IOB) on Tuesday reported a net profit of Rs 212.87 crore for the third quarter of FY21 as compared to a net loss of Rs 6,075 crore in the corresponding quarter of the previous financial year.

The bank has recorded an increase of 11.3% in its total income to Rs 5,786.54 crore as against Rs 5,197.94 crore. IOB, which was under Prompt Corrective Action (PCA), said it has been posting profits for four consecutive quarters and almost fulfilled all the requirements to come out of the PCA.

Speaking to media persons after releasing the earning performance, through virtual mode, Partha Pratim Sengupta, MD & CEO, IOB, said the bank plans to come out of PCA by focusing on recovery, low-cost deposits and less capital consuming advances.

“For the last four quarters, we have been making profit consistently. When compared with Q3 performance of FY20, there was a marked improvement in all key parameters. It is a matter of time for us to exit PCA and is up to the regulator to decide,” he said.

IOB had received a capital infusion of over Rs 8,000 crore in two tranches during the last two quarters of the last financial year, which helped the loss-making bank restart the business with a clean slate. Coupled with recovery and asset-light advances, the bank could achieve profits during the last four quarters.

The MD said there has been perceptible change in NPA levels achieved through recovery measures.

“Currently, the bank has a carry forward loss of Rs 17,500 crore. Our aim is to recover at least Rs 1,000 crore per quarter. In the first quarter of FY21, we recovered about Rs 200 crore due to lockdown, followed by Rs.760 crore and Rs 1,055 crore, respectively. Going forward, the focus will be on recovery in excess of Rs 1,000 crore and it will add to our bottom line,” he said.

According to him, IOB has evolved a policy of not taking fresh exposures in stressed sectors while the bank had exited from accounts in the stressed sectors, wherever feasible.

During the quarter, gross non-performing assets (GNPAs) reduced to Rs 16,753 crore from Rs 23734 crore and stood at 12.19% as against 17.12% and net NPA was contained at Rs 3,905 crore, as compared to 7,087 crore, which was 3.13% as against 5.81%. The provision coverage ratio improved to 91.91% from 86.20%.

While interest income contracted to Rs 4,244 crore from Rs 4,352 crore, other income rose 82.36 % to Rs 1,542.82 crore. Net interest margin stood at 2.45%.

He said around Rs 18,000 crore worth NPAs are awaiting NCLT’s resolution, while Rs 3,000 crore assets was expected to be restructured.

IOB had board’s approval to raise up to Rs 5,500 crore capital. He said the bank needed only Rs3,000 crore and the timing of the issue will be decided at a later date.

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IOB loan fraud : ED says accused who defrauded Indian Overseas Bank paid managers' flight, hotel bills

                                 

Probing a Rs 299-crore Indian Overseas Bank loan fraud case, similar to the alleged USD 2 billion worth PNB swindle, the Enforcement Directorate has found that the accused "paid" for the air travel and hotel stay of a senior bank manager and his family as kickbacks. The central probe agency said "lapses" were also detected on the part of at least three managers — Anil Kumar, P C Rana and N Chokalingam — of the IOB branch in Chandigarh, "as well as the concurrent auditors."

The ED case is related to its criminal money laundering investigation "in a case related to buyers credit fraud of Rs 299.14 crore at the IOB, Chandigarh". The agency took congnisance of an FIR filed by the Central Bureau of Investigation (CBI), to file a case under various sections of the Prevention of Money Laundering Act (PMLA) against IOB Assistant Manager Ashu Mehra, properitor of heights international company Amanpreet Singh Sodhi, owner of vision procon company Dinesh Kumar and directors of a firm saibhakti impex Pvt ltd — Gaurav Kirpal and Aman Kirpal.

"A charge sheet was filed by the CBI against the accused revealing wrongful loss to the tune of Rs 299.14 crore to the bank on account of fraudulent unpaid LOUs (letter of undertaking) and that an amount of Rs 11.36 crore commission for 24 LOUs was also not received by the bank," the ED said. A similar modus operandi of misusing the LOUs has been alleged by probe agencies in the Brady House branch (Mumbai) of the Punjab National Bank (PNB) that led to a fraud estimated to be worth USD 2 billion, which came to light in 2018.

Diamond merchants Nirav Modi and his uncle Mehul Choksi have been alleged as the masterminds of this swindling, identified as one of the biggest case of bank loan fraud in the country. About the latest case, the ED said its probe found that the accused Amanpreet Singh Sodhi, Dinesh Kumar and Gaurav Kirpal "conspired" with IOB assistant manager Ashu Mehra "for illegal diversion of funds to the bank accounts of fraudulent buyers on behalf of Indian import firms."

"These amounts were first credited by the overseas funding bank — Bank of Baroda, Bahamas and PNB, Dubai — into the HSBC Account of the Hong Kong-based export company Colour Wave (HK) Ltd though no imports took place." "The accumulated amount in the HSBC Account was further remitted to India in the accounts of accused companies by showing it as adjustments for exports of third-party payments," the ED alleged.

It was found, the ED said, that the goods were either exported by the accused to different buyers or consignees by resorting "to gross over-valuation or in some cases there was "no export. "In this manner the accused have generated the proceeds of crime by resorting to trade-based money laundering," the ED claimed.

It was found that "payments for the air travels and hotel stays of the accused Ashu Mehra and his family members was borne by accused Dinesh Kumar and Gaurav Kirpal", the agency said. The agency has attached properties worth over Rs 91 crore of various accused involved in the case till now, with an attachment of Rs 6.03 crore being done recently.

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