Indian Overseas Bank’s recovery march continues with the Chennai-headquartered public sector bank recording a net profit of ₹148 crore for the quarter ended September 30, 2020, against a net loss of ₹2,254 crore in the year-ago quarter.
PCA framework
The bank reported a decent net profit for the third quarter in a row, indicating the growing confidence to come out of the RBI’s PCA framework soon.
“The bank has shown marked improvement on all parameters on a year-on-year basis. We have not written-off any huge amount and had a record total recovery of about ₹750 crore during September 2020 quarter, and that has made our balance sheet healthy,” said Partha Pratim Sengupta, Managing Director and CEO of IOB.
The bank’s operating profit grew 80.5 per cent to ₹1,346 crore in the September 2020 quarter against ₹746 crore in the year-ago quarter.
Net interest income grew 30 per cent ₹1,561 crore against ₹1,204 crore in the year-ago quarter. Interest income grew marginally to ₹4,363 crore (₹4,276 crore in Q2 of FY20), while non-interest income was higher by 43 per cent at ₹1,068 crore (₹748 crore).
Retail segment
In the retail segment, its home loan grew 11 per cent at ₹16,145, while jewellery loans increased by 28 per cent at ₹21,869 crore.
NPA provisions stood at ₹736 crore (2735 crore). Fresh slippages were contained at ₹292 crore when compared to ₹1,796 crore in the year-ago quarter.
Gross NPA declined to ₹17,660 crore as of September 2020 quarter when compared to ₹18,291 crore in June 2020 quarter and ₹28,674 crore in the year-ago quarter.
Net NPA ratio stood at 4.30 per cent, down from 5.10 per cent in Q1 of this fiscal and 9.84 per cent in Q2 of FY20. Its provision coverage ratio improved to 89.36 per cent from 87.97 per cent in June 2020 quarter and 75.85 per cent in June 2019 quarter.
In the MSME segment, the bank plans restructuring of loans to the tune of about ₹3,500 crore, involving about 30,000 accounts. MSMEs make up about 25 per cent of its advances.
Sengupta said that while IOB was consistently showing improvements on all key parameters to come out of the PCA framework, the bank will wait till the March quarter to see the impact of Covid-19 and then decide on applying to exit from the framework.