Chennai-based public sector lender Indian Overseas Bank (IOB), which has been plagued by huge sticky assets for quite some time, on Tuesday reported a 75% rise in its net loss to Rs 971 crore for the third quarter, against a net loss of Rs 554 crore a year ago, owing to higher provisions for bad loans. Sequentially, however, the loss narrowed when compared to Rs 1,222.50 crore in Q2 ended September 2017. Total income fell to Rs 5,062.38 crore from Rs 5,599.50 crore a year ago.
Addressing media persons, R Subramaniakumar, MD & CEO, said the bank posted the loss in Q3 due to high provisions towards NPAs. Claiming that there was a slight improvement as far as asset quality was concerned, he said gross NPA (GNPA) was at Rs 33,266.88 crore as on December 31, 2017, with a ratio of 21.95% against Rs 34,502.13 crore with a ratio of 22.42% as on December 31, 2016. There has been a reduction in gross NPA by Rs 1,235.25 crore with a reduction of 47 bps y-o-y in the quarter ended December 2017.
Net NPA (NNPA) was contained to Rs 17,761.22 crore with a ratio of 13.08%, against Rs 19,900.75 crore with a ratio of 14.32%. NNPA as a percentage has decreased by 124 bps on a y-o-y basis. Net NPA has reduced both in quantum and as a percentage of net advances and it is less than March 2017 and September 2017, both in terms of quantum and as a percentage of net advances. Provision coverage ratio stood at 57.83%.
Total recovery of Rs 3,020.53 crore was achieved against the recovery of Rs 3,965.10 crore during quarter ended September 2017, while the total slippage for the quarter ended December 2017 was restricted to `1,431.77 crore, against `2,098.59 crore for quarter ended September 2017. He said during the last three quarters, the recovery was of Rs 9,000 crore.
Commenting on the turnaround, he said the bank was expected to turn around in Q3 of 2018-19, by posting its first quarterly profit after what will be nine quarters of losses. This will be achieved through various measures, including sorting out accounts which are referred to NCLT.
According to him around `10,000 crore are being blocked due to NCLT cases and around 50% of them are expected to be unlocked by Q1, which will bring down the NPA level by nearly `5,000 crore. He expects that post this, the bank’s net NPA is expected to reduce to around to 8% to 9% from the current 13.08%, while the gross NPA is likely to come down to 16% from 21.95%.