IOB net profit at Rs 213 crore, eyes PCA exit

NEW DELHI:  Indian Overseas Bank (IOB), which was brought under the prompt corrective action (PCA) framework of RBI in October 2015, has exhibited a stellar performance for the quarter ended December 2020 and is now hoping to exit the framework as early as the first half of the next financial year. 

The lender has posted a net profit for the fourth consecutive quarter in Q3FY21, after having incurred losses for 18 quarters before the turnaround. For the quarter ended December 2020, net profit came in at Rs 213 crore driven by lower provisioning and high cash recovery against a net loss of Rs 6,075 crore for the corresponding period last fiscal. 

“The bank is on the right track. Capital infusion of close to Rs 8,217 crore in two tranches from the government has helped us clean our books,” said managing director and CEO Partha Pratim Sengupta. The Chennai-based lender has set a tough cash-recovery target of Rs 1,000 crore a quarter and has recovered Rs 1,055 crore in Q3 as economic activities regained pace.

“We have also taken various measures such as reducing our exposure to stressed sectors, which helped us trim losses and contain slippages.Now, it’s a matter of time to come out from the PCA,” Sengupta said. 
IOB also expects to restructure debt worth Rs 3,000 crore in the current financial year under the Reserve Bank of India-approved one-time restructuring scheme—about 2.5 per cent of its book.

About Rs 18,000 crore worth of assets await NCLT resolutions, out of which Rs 3,251,20 crore from 21 accounts has been recovered.  “In the last quarter, resolution of some big accounts will further strengthen the balance sheet,” said the IOB chief. During the quarter, Gross NPA fell to 12.19 per cent from 17.12 per cent as on December 31, 2019, while net NPA dropped to 3.13 per cent from 5.81 per cent.