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Corporate Results - Public Sector Banks

IOB net up 22 pc in Q3 on rise in advances, deposits

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Mr T. S. Narayanasami (right), CMD, Indian Overseas Bank, and Mr A.R. Nagappan, Executive Director, at a press conference in Mumbai on Wednesday. - - Paul Noronha

Mumbai , Jan. 25

INDIAN Overseas Bank posted a net profit of Rs 197.21 crore for the quarter ended December 31, 2005, a rise of over 22 per cent from Rs 161.21 crore in the year-ago quarter, due to rise in advances and deposits.

The bank is also looking to raise tier-II capital of Rs 250 crore in the fourth quarter, in order to maintain its capital adequacy ratio (CAR) and to meet the increase in credit offtake, said Mr T.S. Narayanasami, Chairman and Managing Director, Indian Overseas Bank (IOB).

IOB's total income was Rs 1,303.31 crore (Rs 1,172.99 crore). Net interest income was Rs 525.64 crore (Rs 474.65 crore). Other income fell to Rs 159.96 crore (Rs 166.23 crore). This was due to a fall of around Rs 60 crore in the profit on sale of investments.

Total expenditure was Rs 937.06 crore (Rs 820.03 crore). The bank's CAR was 13.14 per cent (13.9 per cent).

The proportion of net NPAs to total assets fell to 0.78 per cent (1.57 per cent).

Total advances increased by 25.31 per cent, while total deposits increased by 14.43 per cent for the quarter.

The ratio of low-cost CASA deposits (current and savings account) to total deposits increased from 37.04 to 38.37 per cent.

"Our target is to grow our business mix by 25 per cent and cross Rs 1,00,000 crore this fiscal," Mr Narayanasami said. The bank's business level as on December 31, 2005 was Rs 81,142 crore.

IOB was one of the seven banks penalised by Reserve Bank of India for violation of rules in the recent IPO scam. Two of the bank's branches in Ahmedabad were involved in the scam. RBI has asked IOB to pay a penalty of Rs 15 lakh.

Mr Narayanasami said, "We have issued a showcause notice against the branch manager and will take disciplinary action. There has been a lapse, but it was not done intentionally."

IOB is also planning a joint venture for general insurance with Allahabad Bank, Bank of Rajasthan, Karnataka Bank, one foreign partner and a partner from the Indian corporate sector. IOB's share in the joint venture would be 19 per cent. The foreign partner is likely to be finalised by the end of this month, Mr Narayanasami said.

The joint venture would have a capital base of Rs 200 crore and an initial investment of Rs 100 crore.

About IOB increasing its stake in Bharat Overseas Bank, the CMD said, "We have to see how RBI reacts to Bharat Overseas Bank's proposal for an IPO. It is still hanging. If it is rejected, other options may be considered. We may not be the only contender." IOB is the largest stakeholder in Bharat Overseas Bank with 30 per cent.

On Wednesday, the shares of IOB closed at Rs 110.2, down Rs 1.21 from the previous close of Rs 111.55.

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