Indian Overseas Bank net losses double to Rs 550 crore, gross NPA at 11 per cent

MUMBAI: Losses of government owned Indian Overseas Bank ( IOB) doubled in the second quarter as its made higher provisions for bad loans while earning from lending business remained almost flat.

The bank, which is facing prompt corrective action (PCA) from the Reserve Bank of India reported losses of Rs 550 crore in second quarter ending September 2015 against losses of Rs 245 crore reported in the corresponding period last year. The bank reported a loss after showing net profit for the last two quarters.

The provisions rose 74% to rs 1557 crore on account of a sharp rise in total bad loans - - the loan on which borrowers have defaulted. Gross non performing asset touched 11% to Rs 19423 crore, up 4545 on a year on year basis. IOB utilised Rs 170 crore from floating provisions – a buffer that banks’ maintain for use in bad times – for making provisions for NPA. As result, reserves fell to rs 13817 crore from Rs 14405 crore in corresponding period.

On October 5, the RBI initiated PCA - which restricted banks from hiring and opening branches - on account of steep rise in bad loans and the return on asset move to negative territory to -0.74%.

During the period under review the net interest income – difference between interest earned from lending and interest expenses – rose just 5% to rs 1398 crore. Non-interest income- earning from giving guarantees and treasury operations rose 44% to rs 774 crore. The total deposits remained almost flat at rs 233026 crore, which includes the share of low cost deposits at 26%. Advances rose marginally to Rs 176516 crore. The gross NPA stood at 11% while net NPA stood at 7.4%. The total capital adequacy ratio stood at 10.06% while the net interest margin was at 2.03%.

Net profit/loss on quarter on quarter basis on IOB

September 2015	-550.8
June 2015	14.7
March 2015	35.3
December 2014	-516
September 2014	-245.5

Rs in crore