Increased provisioning for bad loans has taken the sheen off the public sector lender Indian Overseas Bank?s (IOB) earning perfomance for the fourth quarter with the bank posting a 89% drop in net profit at R59 crore against R529 crore in the year-ago period.
M Narendra, chairman and managing director, IOB, said during the fourth quarter, two or three big accounts, along with some smaller accounts, have turned into NPA in domestic front. This, coupled with other bad loans on international front, have eaten into the bottomline.
?The bank is taking all efforts to reduce NPAs and the recovery process will be strengthened. The bank?s NPAs currently stands at R6,607.96 crore as on March 31, 2013, compared to R3,920.07 crore in the year-ago period. The rise in bad loans was mainly from sectors such as industries and agriculture. The bank has managed to recover R1,100 crore in cash and R500-600 crore has been upgraded, and in total around R1,700 crore has been recovered during the last quarter,? the bank said
Industries contributed R2,654 crore, agriculture R685 crore, services R1,257crore and personal R159 crore to the NPA basket. ?In the coming quarters, we will be able to rein in bad loans by accelerating the recovery process by Sarfaesi and CDR routes,? Narendra said.
The total income of the bank for the quarter stood at R5,898 crore against R5,415 crore, registering a growth of 8.92%. The net interest income stood at R1,295 crore compared to R1,340 crore. Gross advances from R157,613 crore to R1,64, 366 crore, posting a growth of 4.28%.
Narendra said the bank would look at raising $2 billion through medium term notes (MTNs) besides exploring other means such as rights issue, FPO and QIP to raise funds . It would need R2,350 crore to support its 18-20% growth during the current fiscal. The bank closed 2012-13 with a total business of R3.66 lakh crore compared to R3.21 lakh crore, a rise of around 13.92%.