 "Indian Overseas Bank records 28% rise in Q1 net profit to Rs 504 crore")
State-run Indian Overseas Bank (IOB) reported a 28 per cent increase in net profit to Rs 504 crore in the first quarter of the fiscal year 2023-24, up from Rs 393 crore during the same period in 2022-23, primarily due to a surge in interest income.
Throughout the review period, the bank's total income rose by 24 per cent to Rs 6,234 crore, compared to Rs 5,031 crore during the corresponding quarter of the previous fiscal year. As of the end of June, the bank's gross non-performing assets (GNPA) improved to Rs 13,629 crore, with a ratio of 7.13 per cent. This is a decrease from Rs 14,919 crore with a ratio of 9.12 per cent as of June 2022, indicating a decline in both the quantum and the percentage of gross advances.
The bank's net NPA improved to Rs 2,590 crore with a ratio of 1.44 per cent as of June 2023. This is down from Rs 3,698 crore with a ratio of 2.43 per cent in Q1 of the previous year, a reduction of Rs 1,108 crore in absolute terms. The provision coverage ratio also improved to 94.03 per cent as of June 2023, up from 91.86 per cent in Q1 FY23. The bank's operating profit in Q1 FY24 also increased by 31.4 per cent to Rs 1,349 crore from Rs 1,027 crore in the previous year.
"A significant driver of our growth during the quarter was an increase in interest income. During the period, our slippages were around Rs 535 crore, while our recovery was higher at Rs 885 crore. We aim to maintain this momentum moving forward," said Ajay Kumar Srivastava, Managing Director and Chief Executive Officer of the bank. During the quarter, the bank's interest income rose by 22.3 per cent from Rs 4,435 crore in the previous year to Rs 5,424 crore. All of the bank's slippages during the quarter originated from the retail, agriculture, and MSME (RAM) segments.
The Chennai-based bank's total business grew to Rs 4.56 trillion as of June 2023, up from Rs 4.24 trillion in June 2022. During the review period, its total deposits increased slightly by 2 per cent to Rs 2.64 trillion, compared to Rs 2.60 trillion in Q1 FY23. The bank's CASA improved to 44.14 per cent of overall deposits by the end of the quarter, compared to 43.07 per cent as of June 2022. Total CASA increased from Rs 1.12 trillion in Q1 of the last fiscal year to Rs 1.17 trillion in Q1 FY24. Gross advances also increased to Rs 1.91 trillion as of June 2023, compared to Rs 1.64 trillion as of June 2022.
The bank's board has already approved an increase in paid-up equity capital, aggregating up to Rs 1,000 crore through a follow-on public offer (FPO), rights issue, qualified institutional placement (QIP), or any other method. "Our CRAR increased from 16.10 per cent to 16.56 per cent during the quarter. We are well-capitalised. With the growth that we are seeing, we are well-positioned to handle more than one year of growth. We have already obtained board clearance for raising capital. Depending on the requirement, we may look at it by the third or fourth quarter," added Srivastava.