Financial Daily from THE HINDU group of publications
Saturday, Jul 30, 2005
Financial Daily from THE HINDU group of publications Saturday, Jul 30, 2005 |
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Money & Banking
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Financial Performance Corporate Results - Public Sector Banks Depreciation in G-Secs value — IOB posts 5 pc growth in Q1 profit at Rs 183 crore Our Bureau
Chennai , July 29 INDIAN Overseas Bank posted a 5 per cent growth in net profit at Rs 183 crore on a total income of Rs 1,207 crore for the first quarter ended June 30, 2005. Elaborating on the reasons for the modest growth in profits, Mr T.S. Narayanasami, Chairman and Managing Director, IOB, said: "The bank had to provide Rs 72 crore for depreciation in the value of government securities after transferring a portion from the available for sale (AFS) category to the held to maturity (HTM) category. This was being done to insulate the bank from having to provide more if interest rate increases in future. Besides, our trading profits were down to Rs 82 crore in this period compared to Rs 116 crore last year. And we had to provide for amortisation of securities bought to the extent of Rs 19.31 crore. The low growth in profits was the cumulative effect of these three factors". The bank had added deposits of Rs 550 crore in the first quarter to take its deposit base to Rs 44,790 crore. Loans however grew rapidly by Rs 2,080 crore to a level of Rs 27,285 crore. Mr Narayanasami said the focus in this fiscal would be on augmenting fee-based income, improving net interest margins and taking the business volumes to Rs 86,000 crore. The business level is currently at Rs 72,000 crore. He said that the recent RBI directive to increase the risk weightage for loans to commercial real estate and the capital markets sector would not impact IOB. He said, "We have no unwieldy exposures to these sectors. Our internal guidelines limit such exposure even if there are better returns in these sectors." The bank managed to bring down the net non-performing assets ratio to 1 per cent compared to 2.37 per cent a year ago. The bank's gross non-performing assets were at Rs 1,386 crore. The bank is targeting a cash recovery of Rs 285 crore this year. Capital adequacy ratio for the bank was at 14.06 per cent. Mr Narayanasami said, "We are comfortable on capital adequacy. We have enough capital for our expansion plans for this year."
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