IOB seeks about Rs 1,000 cr support
IOB which has posted profit for the last three consecutive quarters, expects to continue the trend in the remaining part of the current fiscal year with focus on recovery and business pick up
New Delhi: Indian Overseas Bank (IOB) has sought a capital support of about Rs 1,000 crore from the government to create buffer for any exigency, a top official of the bank said.
The state-owned lender, which has posted profit for the last three consecutive quarters, expects to continue the trend in the remaining part of the current fiscal year with focus on recovery and business pick up.
For September quarter, the bank posted a profit of Rs 148 crore as compared to a net loss of Rs 2,254 crore in the same period a year ago. Net profit in the quarter grew 22.3 per cent from Rs 121 crore in April-June.
“We expect the trend to continue and book profit quarter after quarter aided by prospects of better recovery,” IOB Managing Director P P Sengupta said.
“We want our profit to strengthen our capital. As a prudent measure, we have sought some capital support, let us see how much we get. We want to keep capital as buffer for any exigency or contingency.”
The accumulated profit of the entire financial year will further boost capital adequacy ratio which is close to 11 per cent at the end of September 2020, he said. In 2019-20, the government made capital infusion of Rs 70,000 crore into PSBs. Of this, IOB got Rs 4,360 crore.
Sengupta further said the bank has approval for raising Rs 5,000 crore from the market but there is no immediate plan.The bank wants to bring down the gross NPA below 10 per cent by March with the help of pick up in advances and recovery, he said.
The Chennai-based lender expects to reduce the NPA by Rs 2,000 crore during the second half of this fiscal year.
During the second quarter, the bank registered a substantial improvement in asset quality as gross non-performing assets (NPAs) plunged to 13.04 per cent of gross advances from 20 per cent at the end of September 2019.
In value terms, gross NPAs or bad loans fell to Rs 17,659.63 crore as against Rs 28,673.95 crore a year ago. Net NPAs reduced to 4.30 per cent (Rs 5,290.60 crore) from 9.84 per cent (Rs 12,507.97 crore) a year ago.
