The Hindu : IOB net up, mulls public issue again

Online edition of India's National Newspaper
Wednesday, May 29, 2002

Business

Business

IOB net up, mulls public issue again

By Our Special Correspondent

CHENNAI MAY 28. Indian Overseas Bank (IOB) has reported a net profit of Rs.231.04 crores for 2001-02, up from Rs. 115.93 crores in the preceding year. The operating profit has risen to Rs. 617.20 crores (Rs.306.60 crores). The board has recommended a dividend of 12 per cent up from 10 per cent in the previous year.

A combination of factors ranging from prudent treasury operations to increased recovery of NPA (non-performing assets) and focus on quality assets has been responsible for the reasonable jump on the profit front. Non-interest earnings, especially, have added considerably to the bottom line.

Among the non-interest earnings, profit on sale of investments has risen substantially from Rs. 53 crores to Rs. 257 crores.

All crucial parameters have come down. The gross NPA is down from 11.81 per cent to 11.32 per cent of advances. The net NPA has fallen to 6.32 per cent from 7.01 per cent. The cost of deposits, too, has come down to 7.29 per cent as on April 30, 2002.

Efforts are on to bring this further down to 6.90 per cent by the end of the current year.

The capital adequacy of the bank is comfortable at 10.82 per cent, up from 10.24 per cent last year. According to S.C. Gupte, Chairman and Managing Director, IOB would think of raising capital if the business environment demanded.

He, however, did not rule out the possibility of further dilution of Government holding through a public issue.

Officials, nonetheless, indicated that the bank would also explore the option of returning a part of the Government equity prior to any public issue.

Addressing a press conference here today, Mr. Gupte said the focus areas for IOB in the current year would be on mobilising low cost deposits and stepping up retail lending through a slew of innovative products.

Lost cost savings and current deposits currently constitute 30 per cent of its funds.

The objective is to take this to 33 per cent in the current year. Domestic deposits rose by Rs.4,257 crores to Rs. 30946 crores during 2001-02.

Net domestic advances increased by Rs. 1930 crores to Rs. 13787 crores.

The ratio of priority sector lending to net bank credit is at 47.2 per cent, much above the stipulated 40 per cent.

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