IOB Q3 net profit up 23%, helped by interest income and credit growth

Slippages at Rs 1,556 crore, out of which Rs 200 crore was in education sector

Indian Overseas Bank (IOB) on Thursday reported a 23 per cent rise in net profit for the third quarter of Financial Year 2022-23 (FY23) at Rs 555 crore, compared to Rs 451 crore the same time last year.

The state-owned bank’s total income increased by 13 per cent to Rs 6008.07 crore in 2022-23, from Rs 5318.8 crore in the third quarter of 2021-22. “Our net profit numbers are mainly due to increase in interest income and credit growth. Our net interest income (NII) has seen a growth of around 44 per cent year-on-year to Rs 2,272 crore,” said Ajay Kumar Srivastava, IOB’s managing director and chief executive officer. The bank had a credit growth of around 18 per cent year-on-year.

Gross non-performing assets (GNPA) declined 7 per cent: from Rs 15,426 crore in the third quarter last year to Rs 14,333 crore this fiscal. GNPA ratios improved to 8.19 per cent from 8.53 per cent on a quarter-on-quarter basis. Net NPA during the quarter reduced to Rs 4,000 crore or around 2.43 per cent for the quarter ended in December 2022, as against Rs 3,587 crore  or 2.63 per cent as on December 2021.

The bank’s operating profit for the quarter ended in December 2022 was Rs 1,540 crore compared to Rs 1,461 crore during the same period last financial year, posting an increase of Rs 79 crore. Gross advances for the period under review stood at Rs 1,75,050 crore as against Rs 1,48,316 crore as on December 2021. The bank said that it has taken a decision of not taking fresh exposures in stressed sectors.

The bank’s CASA—the ratio of deposits in current and saving accounts to total deposits—stood at 44.75 per cent during the period, compared to 42.53 per cent a year ago. Total CASA increased to Rs 1,14,591 crore as against Rs 1,05,105 crore. During the third quarter, its provision coverage ratio stood at 91.34 per cent compared to 92.33 per cent by the end of December 2021.

In the quarter, the bank’s slippages were to the tune of around Rs 1,556 crore, out of which Rs 200 crore was in the education sector. Srivastava said the bank has set a target of Rs 4,500 crore cash recovery for the current financial year, out of which around Rs 3,200 crore has already been achieved.

He added that for the next financial year, the bank will recover around Rs 1,000-1,500 crore from the technically written off accounts. Out of Rs 710 crore recovered during the third quarter, around Rs 400 crore came from technically written off accounts.

Responding to a question, the bank said that its total exposure to the Adani Group is around Rs 787 crore, which is around 0.40 per cent of its total portfolio. In the quarter under review, IOB’s total deposits stood at Rs 2,57,480 crore as against Rs.2,47,118 crore as on December 2021.