Bad assets pull IOB net down by 36% to Rs 75 crore

Written by fe Bureau | Chennai | Updated: Jan 30 2014, 08:55am hrs
Plagued by asset quality pressures, Chennai-based Indian Overseas Bank (IOB) reported a 35.56% drop in its net profit to R75.07 crore for the third quarter against R116.50 crore in the year-ago period. Gross non-performing assets (NPAs) increased to R9,168.08 crore (5.27%) against R6,515.57 crore (4.13%) during the same period last year.

Net NPAs rose to R5,481.11 crore for the quarter ended December 31 at 3.24% against R3,595.14 crore at 2.33% for the corresponding quarter last year.

M Narendra, chairman and managing director, IOB, said the bottom line has taken a beating mainly due to higher provisioning towards bad debts, restructured accounts and reversal of interests.

During the third quarter, the bank had provisioned R688.29 crore towards bad debts against R485.87 crore in the second quarter. Besides, the bank also made funds towards restructuring of R60.75 crore. The total slippage in the quarter was of R1,600 crore. IOB's provision coverage ratio stood at 56.59% during the third quarter.

Total income of the bank stood at R6,190.26 crore for the quarter against R5,846.98 crore for the same period of last fiscal year, registering an increase of 5.9%.

Narendra said last year was challenging and the bank was focusing on retail and priority lending apart from taking increased steps on recovery process. We have been able to maintain gross NPAs with better recovery, which stood at R206.58 crore while upgradation was at R135 crore.

IOB will focus on the recovery process in the coming quarters. The bank is in talks with asset reconstruction companies (ARCs) to sell some of the bad accounts.

We have identified some 76 accounts worth R1,836 crore to sell to the ARCs and we will finalise the deal looking at the best price we are offered, Narendra said.