Indian Overseas Bank (IOB) reported net loss widened to ₹971 crore in the third quarter ended December 2017, from ₹554 crore in the corresponding year earlier period, due to higher provisioning towards non-performing assets (NPAs).
Higher provisioning
“We have registered net loss due to higher provisioning,” said R. Subramaniakumar, MD & Chief Executive Officer, IOB. “We expect to turn around by the third quarter of 2018-19 by making first quarterly profit.”
Stating that the bank would lay emphasis on retail, agriculture and MSME sectors, he said: “The first phase of addressing crisis to fix the gap is completed. We are now in the last leg of consolidation and stability phase and thereafter leveraging plan. We might see some incremental growth in March and positive growth in the first and second quarter of 2018-19.”
During the period under review, total income of the bank declined to ₹5,062 crore against ₹5,600 crore due to less treasury income and contraction of credit. Interest income declined to ₹4,255 crore against ₹4,878 crore and non-interest income rose to ₹808 crore against ₹721 crore.
Briefing reporters, he said the bank needed to make provision for its NPA, which is declining on one side, while the recovery is increasing on the other.
As of December 2017, the bank’s gross NPA stood at ₹33,267 crore with a ratio of 21.95% against ₹34,502 crore in the year earlier period with a ratio of 22.42%. Recovery was ₹3,021 crore and total slippage was ₹1,432 crore, he said.
According to him, the total provision coverage ration (PCR) improved to 57.83% from 52.17%.
As per the RBI’s direction, in respect of account covered under the provisions of Insolvency and Bankruptcy Code (IBC), the bank was required to make additional provision of ₹718 crore by March 2018. The bank has already provided ₹524 crore up to December 2017 and the balance will be provided before March 2018.
IOB has reduced its exposure to the corporate sector to 42% from 58% as it decided to stay away from the sector, where the risks were high.
On the capital infusion by the Centre, he said the bank had received ₹173 crore in January 2018. The Centre had also announced a capital infusion of ₹4,694 crore for 2017-18 as part of the recapitalisation plan.
The bank had deposits of ₹2.17 lakh crore and advances of ₹1.52 lakh crore. MSME sector grew by 14% and retail segment by 32%. On Tuesday, IOB shares rose 4.30% to close at ₹21.85 on the BSE.