Thursday, 10 August 2017

Indian Overseas Bank reduced Q1 loss

State-owned Indian Overseas Bank (IOB) on Thursday reported narrowing its losses to Rs499.09 crore in the first quarter ended June as provisions for bad assets were reduced. There was a loss to the tune of Rs1,450.50 crore during the corresponding April-June quarter of fiscal ended March 2017.
Total income of the bank also fell to Rs5,174.50 crore during the three months to June this fiscal, as against Rs5,868.44 crore on account of reduction in interest rates, the bank said in a regulatory filing.

Despite a downsizing of the NPA provisions, the bank witnessed a year-on-year spike in its bad assets proportion during the first quarter of current fiscal 2017-18. Gross non-performing assets (NPAs), as a percentage of gross advances, shot up to 23.60% as on 30 June 2017 as against 20.48% as on end-June last year.
“Accretion to gross NPA is contained to Rs355 crore in the June quarter. One of the main reasons for higher gross NPA ratio is the contraction of credit by 9.26% year-on- year,” the bank said. Net NPAs or bad loans also rose to 14.97% of net advances by 30 June 2017 from 13.97% by the end of June 2016.
Net NPA has reduced in quantum and the higher net NPA is due to contraction of credit by 9.26% year on year, it said. In value-terms, gross NPAs spiked to Rs35,453.12 crore from Rs33,913.15 crore for the comparable periods. However, size of net NPAs was down at Rs20,165.61 crore by end of June 2017 from Rs21,321.24 crore a year earlier.
Among other key verticals, the net interest margin (NII)—a key factor to measure profitability—stood at 1.65% for the quarter ended June 2017 as against 1.87% end-June 2016. On the good side, bank cost to income ratio fell to 61.40% for the quarter from 63.62% same period year ago.
On NPA management, IOB said the recovery during the June quarter is significantly higher at Rs2,784 crore as against Rs1,465 crore in the year ago corresponding period. 

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