IOB Q3 loss widens almost 10-fold to RS 5,901 cr on massive provisioning

Indian Overseas Bank (IOB) has reported a substantial increase in loss before tax of Rs 5,901.6 crore during the quarter ended December 31, 2019 as against Rs 609.14 crore, a year ago. The Bank attributed a high provision of Rs 5,564 crore towards NPAs for the high loss figure.

IOB's total income declined 8.6 per cent to Rs 5,197.94 crore during the quarter from Rs 5,688.59 crore during same period last year. Its total business stood at Rs 3,59,933 crore as on December 31, 2019 as against Rs 3,70,901 crore a year ago.

Gross NPAs of the bank came down in December 31, 2019 to Rs 23,733.86 crore with ratio of 17.12 per cent, from Rs 35,787 crore (ratio: 23.76 per cent) as on December 2018. Net NPAs declined to Rs 7,087.09 crore (5.81 per cent) from Rs 17,987.92 crore (13.56 per cent) during same period last year, due to provisions made during the quarter. This is less than six per cent prescribed by the Reserve Bank of India.

The Bank has been striving to bring down net NPAs below six per cent, in order to come out of the Prompt Corrective Action (PCA) imposed on it by the Banking regulator. The lender says it plans to come out of PCA by focusing on recovery, low-cost deposits and less capital consuming advances.

The Central Government has infused Rs 4,360 crore during the quarter ended December 2019. The bank's CRAR stands at 10.43 per cent post infusion of capital. The provision coverage ratio improved to 86.20 per cent compared to 64.23 per cent during same period last year, it added.

Total recovery, including technically written-off accounts rose to Rs 7,085.04 crore for quarter ended December 2019 from Rs 3,723 crore during the quarter ended December 2018, while total fresh slippage for quarter ended December 20l9 stood of Rs 1,647.82 crore. Recovery was higher than slippages during the quarter mainly dueto focused priority action on arresting slippages and improving recovery in NPA/OTS occounts, said the Bank.

IOB to get Rs 4,360 crore from govt, hopes to report profits from March

Indian Overseas Bank (IOB) has announced that the Government of India has sanctioned the release of Rs 4,360 crore for the bank.

"We wish to inform that the Bank has received vide letter dated December 26, 2019 a sanction from the Government of India for release of Rs 4,360 crore towards contribution of the Central Government in the preferential allotment of equity shares (Special Securities/Bonds) of the bank during the financial year 2019-20 as Government's investment," said the bank.

Karnam Sekar, Managing Director and Chief Executive Officer, IOB, recently said that the bank is expected to come out from prompt corrective action (PCA) soon and start reporting net profit in March 2020.

Govt increases authorised capital of Indian Overseas Bank by Rs 5,000 crore

The government has increased the authorised capital of Indian Overseas Bank (IOB) by Rs 5,000 crore, enabling it to shore up its capital adequacy by issuing share capital.

The state-owned lender said that the government, after consulting the Reserve Bank of India, has increased its authorised capital from Rs 10,000 crore to Rs 15,000 crore.

"The increase in authorised capital will enable the Bank to take steps to shore up its capital adequacy by way of issue of share capital including in case of further capital infusion by the Government," it said.

Karnam Sekar, managing director and chief executive officer of IOB, has recently said the bank has sought Rs 6,000 crore funds from the government for the current fiscal. The Capital to Risk (Weighted) Assets Ratio (CRAR) of the Bank stood at 10.02 per cent during the quarter ended June, 2019.

According to stock exchange filings, the government held around 92.52 per cent stake in IOB in the quarter ended June 2019.

IOB's board of directors has approved issue of equity capital during 2019-20 to a maximum extent of 300 crore equity shares with appropriate premium by way of public issue, rights issue, shares to employees, preferential issue and Qualified Institutional Placement. It has received shareholders' approval for the same in its Annual General Meeting on July 10, 2019.