Indian Overseas Bank (IOB) posted a 53 per cent drop in its net profit at Rs 108 crore for the quarter ended December 31, as compared to the corresponding period last year. The main reasons were provisioning and restructuring for non-performing assets (NPAs), according to M Narendra, chairman and managing director of the public sector bank.
The net profit for the third quarter of last financial year ended December 31, 2010, was Rs 231.7 crore.
The total income for the third quarter of current fiscal stood at Rs 5,015 crore compared to Rs 3,453 crore in the same period of last financial year, an increase of 45 per cent.
The decrease in the net profit was due to provisioning of Rs 714 crore, including Rs 214 crore for restructuring NPAs and Rs 56 crore for standard advance. Further, the restructuring of some major debts, including of a telecom tower and a state electricity distributor and transmitter, which has Rs 1,220 crore and Rs 890 crore debt, respectively, as affected the profit, Narendra said.
“We had to keep interest in reversal of Rs 75 crore for restructuring of these large loans. This has also affected our gross profit,” the CMD noted.
He, however, added the net NPA came down from 1.51 per cent for three months ended December, 2010, to 1.23 per cent for the quarter ended December 31, 2011.
The bank had restructured bad debts of Rs 3,600 crore for the quarter ended December 31. The gross NPA stood at Rs 3,972 crore during the quarter, compared to Rs 3,264 crore during the same period last year.
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It has recovered NPA of Rs 843 crore during the first nine months of the current financial year and is expecting to recover a total of Rs 1,500 crore in the full financial year, surpassing the target of Rs 1,200 crore recovery.
The bank’s total business crossed Rs 3,00,000 crore till the date. The overall growth is at 20-22 per cent, Narendra said. IOB is expecting trading income to grow high with the deployment of money increases and an increased non-interest income in the fourth quarter to offset the decrease of net profit this quarter.