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Informist, Friday, May 2, 2025

--Indian Overseas Bk:See govt stake at 90% if INR-40-bln capital raised FY26 

--CONTEXT: Indian Overseas Bank got board OK to raise INR 40 bln via equity
--Indian Overseas Bank: Have provided 100% against MTNL account that slipped 
--Indian Overseas Bk: Don't see deposit growth lagging credit growth this yr 
--Indian Overseas Bank: Want to grow business by 13-14% in FY26 
--Indian Overseas Bank: Not seeing any major stress in MSME book 
--Indian Overseas Bank: cost of deposits will not go up going forward 
--Indian Overseas Bank: Jan-Mar total recoveries INR 9.92 bln, down 32% YoY 
--Indian Overseas Bank: One big account slipped in Jan-Mar 
--Indian Overseas Bk Jan-Mar slippages INR 27.56 bln vs INR 2.84 bln Oct-Dec 
--Indian Overseas Bk: Total advances INR 2.5 tln as on Mar 31, up 14.15% YoY 
--Indian Overseas Bk Jan-Mar credit cost 0.33% vs 0.70% qtr ago, 0.76% yr ago 
--Indian Overseas Bk CASA ratio 43.65% as on Mar 31 vs 43.37% as on Dec 31 
--Indian Overseas Bank Jan-Mar domestic NIM 3.77% vs 3.47% in Oct-Dec 
--CONTEXT: Comments by Indian Overseas Bk's mgmt in post-earnings media call 
--Indian Overseas Bk: Jan-Mar net interest income INR 31.23 bln, up 13% YoY 

MUMBAI – Indian Overseas Bank expects credit growth to be 14-15% and deposit growth at 13% for the current financial year, Managing Director And Chief Executive Officer Ajay Kumar Srivastava said in a post-earnings media call on Friday. "Deposit growth will not be lagging. Credit growth and deposit growth will match. That is the plan," he added. He expects overall business growth at 13-14% for 2025-26 (Apr-Mar).

The total business of the bank stood at INR 5.62 trillion as on Mar. 31, up 11.30% on a year-on-year basis. Total deposits grew 9.1% on year to INR 3.12 trillion and the gross advances rose 14.2% on year to INR 2.50 trillion as on Mar. 31.

Srivastava said that this year the main focus will be on mobilising deposits, particularly current account savings account deposits. In the latest quarter, the CASA ratio increased to 43.65% from 43.37% as on Dec. 31. The cost of deposits of the bank inched up to 5.17% in the reporting quarter from 5.08% a quarter ago and 4.88% a year ago. He also said that he does not expect cost of deposits to rise going forward.

On Friday, the Chennai-based bank's net profit increased 30.1% on year to INR 10.51 billion for the quarter ended March. This is the first time the bank has crossed a quarterly net profit of INR 10 billion. "We are pretty confident that this 1,000 plus net profit will be generated (in subsequent quarters)," Srivastava said. 

Net interest income increased by 13% on year to INR 31.23 billion for the quarter ended March and the domestic net interest margins of the bank stood at 3.77% as compared to 3.47% in the previous quarter.

In terms of asset quality, the bank's slippages in Jan-Mar jumped to INR 27.56 billion from INR 2.84 billion in the previous quarter. This was due to the Mahanagar Telephone Nigam Ltd. account which slipped during the quarter. The bank had made 100% provision for this account, the bank said. Slippages in other segments such as agriculture, micro-small and medium enterprises reduced in the latest quarter. Srivastava said that he does not see any major stress in the MSME book as of now. "Whatever lending we are doing going forward, we are very cautious. And wherever we are getting value, and wherever we feel that the asset will be giving interest income, we are lending there," Srivastava said.

Even as the slippages rose, the gross NPA ratio of the bank moderated to 2.14% as on Mar. 31 from 2.55% a quarter ago, and the net non-performing asset ratio improved to 0.37% from 0.42% as on Dec. 31. The credit cost for the reporting quarter stood at 0.33% against 0.70% a quarter ago and 0.76% in the corresponding quarter a year ago.

Total recoveries fell by 32% on year to INR 9.92 billion in the reporting quarter. In FY25, the bank recovered around INR 40 billion, and aims to recover INR 45 billion in the current financial year.

The board of the bank has approved raising upto INR 40 billion through equity and up to INR 10 billion through debt. If this goes through, the government's shareholding in the company will come down to 90% from the current 94.61% as on Mar. 31, the bank said.

On the National Stock Exchange on Friday, shares of Indian Overseas Bank closed 0.9% higher at INR 37.86.  End

Reported by Kshipra Petkar

Edited by Deepshikha Bhardwaj

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