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Government-owned Indian Overseas Bank (IOB) is planning to increase its advances in the current fiscal FY23 with secular growth in sectors like retail, micro, small and medium enterprise (MSME), and corporate and agricultural loans. The bank's management is not expecting any significant impact on the bank's liquidity or profitability ahead.
Partha Pratim Sengupta, Managing Director & Chief Executive Officer of IOB in the annual report FY22, told shareholders that the Covid-19 pandemic across the globe resulted in the decline of economic activity and movement in the financial market.
He added, "In this situation, Bank geared itself to meet the challenges and has been evaluating the situation on an ongoing basis and has pro-actively provided against the challenges of likely stress on the banks' assets as required. Bank’s management is not expecting any significant impact on Bank’s liquidity or profitability."
In FY22, IOB reduced its gross NPA substantially to ₹15,299 crore compared to ₹16,323 crore in the previous fiscal and hence brought down the GNPA% from 11.69% to 9.82% through multipronged and focused recovery initiatives.
Further, the net NPA declined to ₹3,825 crore in FY22 from ₹4,578 crore in FY21. In percentage terms, net NPA dipped to 2.65% from 3.58% in FY21.
Also, the provision coverage ratio (PCR) of IOB has improved substantially as of March 31, 2022, from 90.34% to 91.66% - one of the highest in the industry.
Further, IOB's net profit doubled to ₹1,709 crore in FY22 compared to ₹831 crore in FY21. Meanwhile, net interest income (NII) jumped to ₹6,311 crore in FY22 versus ₹5,899 crore in FY21.
CASA has improved from Rs.102165 Crores as of March 31, 2021, to ₹1,13,877 crore as of March 31, 2022, with a growth of 11.46%. CASA% has moved up from 42.52% in FY21 to 43.44% in FY22.
For FY23, Sengupta said, " The Indian Overseas Bank is aiming to increase advances in the current financial year with secular growth across retail, micro, small and medium enterprise (MSME), and corporate and agricultural loans."
"With the support of a huge base of several loyal customers and a large base of young, strong, and energetic workforce, Brand IOB is sure to play an important role in the Banking Industry," Sengupta added.
For the banking sector, the IOB MD and CEO said, "Retail inflation of India has breached the upper limit of the Reserve Bank of India's target range for the fourth consecutive time as of April 2022. The surge is largely driven by rising fuel and food prices on account of the Russia-Ukraine war. The projections indicate that inflation is likely to remain above the upper tolerance level of 6% through the first three quarters of 2022-23."
"Hence, there was a need for calibrated monetary policy action to keep inflation under control," he said further.
Sengupta added, "Following the two hikes by Reserve Bank of India, Banks is seen passing on the benefits to customers and increasing their deposit rates. The pace of rate transmission has improved for external benchmark-linked loans. We may also see more rate hikes by the Reserve Bank of India in the next couple of MPC to ensure that inflation remains within the target going forward."
India Ratings has revised its outlook on the banking sector to 'improving' from 'stable' for 2022-23, helped by better credit demand and strong balance sheet of lenders, Sengupta cited.
In the banking sector, Sengupta said, " For next fiscal year, credit growth to pick up to 10% and sees gross non-performing asset (GNPA) ratio at 6.1%."
On BSE, IOB shares closed at ₹16.95 apiece up by 2.73% on Friday.