Indian Overseas Bank has doubled its net profit to Rs 232 crore for the quarter ended December 31, 2010 compared with Rs 102 crore for the same period the previous year.

The bank attributes this to a pick up in credit and increase in non-interest income.

Addressing a press conference, Mr M. Narendra, Chairman and Managing Director, said that the bank would not prune its credit growth to productive sectors such as small and medium enterprise, retail trade, manufacturing and corporate. Lending to big infrastructure projects would be ‘selective', he said.

He said the bank would take more initiatives in expanding its deposit base rather than cut down on its advances growth.

Credit deposit ratio was at 80 per cent as on December 31, 2010. Non-interest income has also helped profitability. During the quarter, the bank recovered Rs 77 crore from written off accounts - this goes straight to the bottomline. The net interest margin has improved to 3.27 per cent from 2.69 per cent. This was a result of saving 40 basis points from cost of deposits and yield was improved by 25 basis points to 8.9 per cent. About Rs 8,000 crore of deposits acquired at an interest of 11 per cent were reprised at the current rate of 9 per cent during the third quarter.

To raise $1 billion

Its Executive Director, Ms Nupur Mitra, said the bank intends to raise $1 billion (Rs 4,500 crore) through a 5-year bond issue (medium term note) in the overseas markets. She said that raising equity was also on the cards. This could be in the form of equity support from the government - the bank has asked for Rs 1,400 crore – or, a QIP issue or even a follow on public issue.

The bank is budgeting for a 25 per cent increase in credit. Ms Mitra also hinted at another hike in deposit - the bank needs to raise resources to fund this level of credit growth.

Recruitment

With IOB planning to increase its branch network by 200 branches, it expects to recruit about 1,000 clerks, 1,500 officers and 750 specialist officers.

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