IOB Q1FY23 Indian Overseas Bank to raise Rs 1,000 cr through QIP route; to focus on capital-light and rated accounts
Chennai/Kolkata: Public sector lender Indian Overseas Bank (IOB) is looking to raise up to Rs 1,000 crore under Common Equity Tier (CET) through qualified institutional placements (QIP) to boost profitability, bank's MD and CEO Partha Pratim Sengupta said.
Sengupta told reporters on Saturday while discussing IOB's Q1FY23 results that the board has already given the nod to raise the capital which is aimed at sustaining profitability, adding that "it should be sufficient to place the bank in a comfortable position for the next 1 to 1.5 years".
IOB reported a 20 percent year-on-year (YoY) growth in net profit to Rs 392 crore from Rs 327 crore in the same quarter of the previous year.
The bank's operating profit declined to Rs 1026 crore in Q1FY23 from Rs 1202 crore in Q1FY22 owing to losses in investments marked to market for a provision of Rs 340.16 crore, Sengupta said.
Interest income for the bank stood at Rs 4435 crores for the quarter against Rs 4,063 crores in the same quarter of the last year.
The bank's net interest margin (NIM) increased to Rs 2.53 crore in Q1FY23 versus Rs 2.34 crore in the same quarter of the previous year.
The Chennai-based bank said its total deposits rose by 7.04 percent year over year to Rs 2,60,045 crores at the end of the first quarter of this financial year compared to Rs 2,42,941 crores in Q1FY22.
The gross non-performing assets (NPA) declined by 7.41 percent YoY to Rs 14,769 crore in Q1FY23 against Rs 15,952 crore in Q1FY22.
Its net NPA stood at Rs 3,698 crore in the period under review compared while it was Rs 3,998 crore in Q1FY22, a decline of 7.50 percent YoY.
The Gross NPA ratio stood at 9.03 percent compared to 11.48 percent in the same quarter of the last year while it logged a net NPA ratio of 2.4 percent against 3.15 percent in the same quarter of the last year.
The provision for bad loans during the quarter under review decreased to Rs 132.73 crore which was Rs 1,010.15 during the same quarter last financial year.
Sengupta said the main reason IOB went into RBI's prompt corrective action (PCA) was because of corporate credit. Consequent to this, the bank has decided to distribute focus on all segments – Retail, Agriculture, MSME (RAM) and corporate and lend to rated accounts and capital light accounts to further their growth in products.
IOB reported a return on assets (ROA) of 0.52 percent against to 0.47 percent in Q1FY22.
Its return on equity (ROE) of the bank comes down to 12.63 percent in Q1FY23 which was 14.57 percent in Q1FY22.
Consequent to the rise in other income, the bank's non-interest income slid from Rs 1,092 crore in Q1FY22 to Rs 593 crore in Q2FY23.
The bank said its total expenses increased from Rs 3,953 crores for the quarter ended June 30, 2021, to R 4002 crores for Q1FY23.
In comparison to last year's same quarter's Rs 3,81,885 crores, the bank's overall business expanded by 10.92 percent to Rs 4,23,589 crores as of June 30th, 2022.
Gross Advances surged to Rs 1,63,544 crores up from Rs. 1,38,944 crores the previous year in the same quarter.
CASA increased to 43.07 percent, up from 41.63 percent and total CASA has improved to Rs 1,12,012 crores from Rs. 1,01,129 crores on June 30, 2021.
The bank’s Provision Coverage Ratio improved to 91.86 percent as of June 2022, as against 91.56 percent in June 2021.
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