Indian Overseas Bank has reported a seven per cent growth in net profit during the third quarter ended December 31, 2013 at Rs 116.50 crore as compared to Rs 108.27 crore, a year ago.
IOB's Chairman and Managing Director M Narendra attributed the growth to retiring high cost bulk deposits, which stands at 21.23 per cent as against 34 per cent, a year ago.
The other reasons include raise in non-interest income which rose by 25 per cent to Rs 514 crore from Rs 411 crore.
On the higher provisioning he said, it has increased to Rs 436.37 crore in the third quarter from Rs 252.80 crore, a year ago. However in per centage terms provisioning moderately lower at 59 per cent as compared to 71.70 per cent.
The high provision was due to some stressed accounts in sectors like infrastructure, paper industry, aviation and others.
Bank's gross NPA increased to Rs 3,595.14 crore from Rs 1599.74 crore, a year ago.
With the provision likely to be moderate in the current quarter and more bulk and high cost deposits to retire during the fourth quarter, the Bank expects to post better profit.
Besides, RBI's cut in CRR will leave the Bank Rs 475 crore additionally. By deploying this, the Bank would get around Rs 48 crore as additional earning, which will increase profitability.
He added, in 2011-12 the Bank has reported a profit of Rs 1050 crore and expects to maintain to the same level in 2012-13.
On the recovery, he said, the Bank has recovered Rs 199 crore in third quarter as against Rs 173 crore, a year ago.
On fund raising, he said, the Government has agreed to infused around Rs 1000 crore asagainst Bank's requirement of Rs 1500 crore.
For the balance, he said, besides profit, it would look at rights issues, QIP at an appropriate time. We can also tap other Government financial institutions like Life Corporation of India, which infused around Rs 300 crore earlier.
BOX
In response to RBI's decision to cut CRR by 25 basis point, IOB has decided to lend housing loans at the base rate of 10.5 per cent upto Rs 75 lakh.
At present Bank is lending housing loan upto Rs 30 lakh for 10.50 per cent, which will be expanded to Rs 75 lakh, irrespective of loan tenure.
"We will consider passing on the CRR cut benefits to the customer in other portfolios too," said Narendra.
