Earnings Review
Indian Overseas Bk Oct-Dec PAT up on rise in interest income
This story was originally published at 17:31 IST on 20 January 2025
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--Indian Overseas Bk Oct-Dec net profit INR 8.74 bln vs INR 7.23 bln yr ago
--Indian Overseas Bk gross NPA ratio 2.55% as on Dec 31 vs 2.72% quarter ago
--Indian Overseas Bk Oct-Dec total income INR 84.09 bln vs INR 74.37 bln
--Indian Overseas Bk net NPA ratio 0.42% as on Dec 31 vs 0.47% quarter ago
--Indian Overseas Bk Basel-III capital adequacy ratio 16.97% as on Dec 31
--Indian Overseas Bk Oct-Dec provisions INR 10.29 bln vs INR 7.01 bln yr ago
--Indian Overseas Bk Oct-Dec NPA provisions INR 4 bln vs INR 3.67 bln yr ago
--Indian Overseas Bk provision coverage ratio 97.07% as on Dec 31
--Indian Overseas Bk Apr-Dec net profit INR 22.84 bln vs INR 18.48 bln yr ago
--Indian Overseas Bk Apr-Dec total income INR 244.61 bln vs INR 206.00 bln
--Indian Overseas Bk wrote off loans worth INR 2.19 bln Oct-Dec
--Indian Overseas Bk Oct-Dec slippages INR 2.84 bln vs INR 2.51 bln qtr ago
--Indian Overseas Bk Oct-Dec cost of funds at 5.24% vs 5.13% qtr ago
--Indian Overseas Bk retail loans at INR 586.11 bln Dec 31, up 25.73% YoY
--Indian Overseas Bk advances INR 2.38 tln as on Dec 31, up 9.93% YoY
--Indian Overseas Bk CASA ratio 43.37% as on Dec 31
--Indian Overseas Bk total deposits INR 3.05 tln as on Dec 31, up 9.74% YoY
--Indian Overseas Bk Oct-Dec cost-to-income ratio at 44.55%
--Indian Overseas Bk Oct-Dec domestic NIM 3.47% vs 3.21% qtr ago
--Indian Overseas Bk Oct-Dec global NIM 3.33% vs 3.08% qtr ago
--Indian Overseas Bk Oct-Dec net interest income INR 27.89 bln, up 16.3% YoY
By Sourabh Kumar
MUMBAI – Indian Overseas Bank's net profit for the December quarter rose 20.9% on year to INR 8.74 billion due to a rise in interest income and a fall in operating expenses of the bank. Sequentially, the bottom line of the bank rose 12.4%. The rise in the bank's net profit was capped by a sharp increase in its provisions on an annual basis.
Income on investments of the bank rose 19.0% on year to INR 18.08 billion, which supported its bottom line. While the total income increased on a year-on-year basis, it fell sequentially. Total income rose 13.1% on year, but was down 0.9% on quarter to INR 84.09 billion. In Oct-Dec, the bank's income on investment rose 19.0% on year to 18.08 billion. The bank's operating expenses declined 3.1% on year, and 10.9% sequentially. A decline in operating expenses pushed the total expenses of the bank down 3.4% on quarter to INR 61.43 billion.
Further, the bank's net profit in Apr-Dec rose 23.6% on year, due to a fall in provisions for bad loans. It was down 72.4% on year to INR 6.34 billion in Apr-Dec.
In Oct-Dec, while the bank's total provisions increased 46.7% on year, it was down 10.3% sequentially to INR 10.29 billion. Provisions for non-performing assets, on the other hand, rose 467% on quarter to around INR 4.0 billion in Oct-Dec. Further, the Basel-III capital adequacy ratio of the bank was 16.97% as on Dec. 31, down from 17.45% quarter ago but up from 16.80% a year ago. At the end of December, the provision coverage ratio of the bank stood at 97.07%, up one basis point on quarter.
The gross non-performing asset ratio of the bank was 2.55% as of Dec. 31, down 145 bps from a year ago. It fell 17 bps on a quarterly basis. The net NPA ratio of the Chennai-based bank was 0.42%, down 20 bps on year and 5 bps on quarter.
The bank said it did not make provisions for the disputed income tax liability of INR 35.60 billion and indirect tax liability of INR 14.55 billion, as it was confident of succeeding in appeals filed with the appellate authorities against such tax liabilities.
Further, the bank made a recovery of INR 6.35 billion from written-off loans in the quarter ended December. In Apr-Dec, the bank recovered INR 18.85 billion.
In terms of business growth, the bank provided loans worth INR 2.38 trillion as of Dec. 31, up 9.9% on year. The current account savings account ratio of the bank was 43.37% as of Dec. 31, down 12 bps on year but up 93 bps on quarter. The credit-to-deposit ratio of the bank rose a whopping 380 bps on quarter to 77.88% as of Dec. 31.
The net interest income of the Chennai-based bank was INR 27.89 billion, up 16.3% on year. The bank's net interest margin rose 21 bps on year to 3.33%. Sequentially, it was up 25 bps.
Despite a rise in the bank's cost of funds to 5.24% in Oct-Dec from 5.13% a quarter ago, the cost of deposits decreased to 5.08% against 5.15% in Jul-Sept.
Further, while the bank's advances to retail, agriculture, and micro, small, and medium enterprises rose, its loans to corporates and others declined 19.6% on year to INR 485.99 billion. Sequentially, it was down 6.2%.
The bank's slippage ratio was 0.13% at the end of December, up from 0.11% a quarter ago. However, it was down 4 bps on year. The bank reported fresh slippages of INR 2.84 billion in Oct-Dec against INR 2.51 billion a quarter ago, but these were down from INR 3.31 billion a year ago.
On Monday, shares of Indian Overseas Bank closed 3.7% higher at INR 52.52 on the National Stock Exchange. End
Edited by Tanima Banerjee
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