MUMBAI: A significant improvement in slippages and asset quality coupled with a spike in non-interest income have helped the state-run Indian Overseas Bank (IOB) to book a 26.60 percent on-year growth in net profit at Rs 633 crore in the June quarter compared to Rs 500 crore it logged in the same period last fiscal.
Ajay Kumar Srivastava, the chief executive of the Chennai-based lender, attributed the robust growth to the bank's strong operational efficiencies and strategic initiatives.
The asset quality has shown a marked improvement with slippages coming down to Rs 277 crore during the quarter, taking the slippage ratio down by 18 basis points to 0.13 percent, Srivastava told reporters during the earnings concall.
As a result, gross non-performing assets (NPA) plunged to 2.89 percent from 3.10 percent in March 2024 and from 7.13 percent in June 2023, and the net NPAs too declined to 0.51 percent as against 0.57 percent in March 2024, and from 1.44 percent in June 2023. This also helped the bank improve the provision coverage ratio to 96.96 from 94.03 in June 2023.
The key profitability gauge net interest margin stood at 3.06 percent for the reporting quarter. Total income improved by 21.54 percent to Rs 7,568 crore from Rs 6,227 crore. Of this, interest income grew 20.48 percent to Rs 6,535 crore as against Rs 5,424 crore and non-interest income grew 28.64 percent to Rs 1,033 crore as against Rs 803 crore.
Total recovery for the quarter stood at Rs 582.27 crore of which recovery from the technically written off accounts stood at Rs 311.37 crore.
Srivastava said the bank’s total business rose 16.04 percent to Rs 5,28,773 crore, with deposits at Rs 2,98,681 crore and advances at Rs 2,30,092 crore. The low-cost Casa deposits (current account savings account) improved to Rs 1,25,947 crore from Rs 1,16,694 crores, or 42.17 percent of the total liabilities. This also led to better credit to deposit ratio of 77.04 percent, an improvement of 470 bps.
The bank, founded in 1937 by M Chidambaram Chettiyar, was nationalized in 1969, and today operates 3,236 branches, 3,506 ATMs, and has 6,379 business correspondents serving over 41 million active customers. It also has a presence in Singapore, Hong Kong, Thailand and Sri Lanka.