Indian Overseas Bank (IOB) has reported a surge in its net profit and total income for the second quarter of fiscal year 2023, driven by a decline in bad loans. The Chennai-based bank revealed a net profit rise of 25% to Rs 625 crore ($8.4 million) in the quarter ending September 2023, compared to Rs 501 crore ($6.7 million) a year ago.
The bank's total income for Q2FY23 increased to Rs 6,935 crore ($93.3 million) from Rs 5,852 crore ($78.7 million) in the same period last year. Interest income also improved, rising to Rs 5,821 crore ($78.3 million) from Rs 4,718 crore ($63.5 million). Non-interest income remained steady at Rs 1,114 crore ($15 million).
IOB's operating profit escalated to Rs 1,677 crore ($22.6 million) from Rs 1,494 crore ($20.1 million) in the year-ago period. The bank's gross Non-Performing Assets (NPAs) declined to 4.74% and net NPAs to 0.68%, contributing to the improved performance.
In addition, the bank increased its NPA provisions to Rs1,120.50 crore from Rs627.15 crore last year while maintaining a stable capital adequacy ratio of 17%. The provision coverage ratio also improved to 96.76%.
The Net Interest Margin (NIM), a key measure of profitability, rose to 3.12%. IOB's Managing Director Ajay Kumar Srivastava forecasts an NIM above 3% for FY24.
The bank also reported a recovery of Rs 1,069 crore ($14.4 million) in the quarter, while fresh slippage was limited to Rs 300 crore ($4 million). Srivastava expects a recovery of approximately Rs 5,000 crore ($67.3 million) this fiscal year as larger accounts are being resolved before the National Company Law Tribunal.
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