Public-sector Indian Overseas Bank reported a 35.5 percent decline in net profit to Rs 75.07 crore for the third quarter ending December 31, 2013. The Chennai-based bank had reported net profit of Rs 116.50 crore in the corresponding period of the previous year.
Also read: IOB's net profit dips 35% to Rs 75 crore in Q3
In an interview with CNBC-TV18’s Latha Venkatesh, the bank’s chairman M Narendra spoke about its financials, strategy going forward and how the bank is focused on bringing down its non-performing assets.
Below is the interview of M Narendra Chairman, Indian Overseas Bank with Latha Venkatesh on CNBC-TV18.
Q: If you can take us through the details of the NPLs. Your gross NPLs have risen by about Rs 900 crore, if you can take us through other details in terms of recoveries in terms of upgraded assets also in terms of fresh slippages?
A: Compared to Rs 8,207 crore last quarter, this quarter the NPA level has gone up to around Rs 9000 crore plus. The percentage also has moved from 4.65 to 5.27 percent.
The bigger accounts are hardly two or three: one account has Rs 202 crore, others are Rs 74 crore and Rs 48 crore -- all other accounts are smaller accounts. So, the incremental slippage is Rs 1600 crore.
However, the recovery in this quarter has been better than the last quarter. Recoveries stood at Rs 222 crore this quarter. Plus there have been upgradations and we had some elbow in relation to the technical write-off that we did in Q1. So, we did that technical write off of Rs 324 crore. That has resulted in an overall NPA kept at that level after reduction.
Q: You said you have Rs 1600 crore of slippages, what was it last quarter?
A: Last quarter, slippage was around Rs 1000 crore odd.
Q: Of this Rs 1600 crore, you could write off Rs 324 crore and upgrade Rs 220 crore?
A: Upgradation was Rs 135 crore, cash recovery stood at Rs 275 crore. Technical write-off was Rs 334 crore
Q: What is the restructured assets position?
A: Restructured asset for this quarter has been very minimal. In fact, restructured assets in the quarter stood at around Rs 948 crore as against last quarter of Rs 2,510 crore.
Out of that Rs 948 crore, Rs 462 crore of five accounts is CDR. Our overall restructured asset -- if I take above two years out of the restructured base -- compares favourably with the last quarter. It has gone from 7.44 percent in the last quarter to 7.88 percent, which is Rs 13,735 crore.
From the restructured assets, the slippage has been very minimal. In fact compared to last quarter figure of Rs 1094 crore, this quarter it is Rs 1394.
Q: On an average of your total restructured book how many of them become NPLs, how many of them recover?
A: Cumulatively 93 percent of the restructured assets have been performing. Only around 7.45 percent of NPAs is standard advances.
Q: What is your networth at this point in time? I think you have an equity capital of about Rs 924 crore and reserves of about Rs 11000 crore?
A: During the quarter, we received Rs 1,200 crore of equity infusion by the government of India. Including what cumulative profit we ploughed back has resulted in around 11 percent of capital adequacy.
Our core equity is more than 7 percent. Today our board has decided on Rs 426 crore of private placements that will do with LIC. The EGM is scheduled for February 26.
Q: How much will your equity increase?
A: We will get Rs 426 crore equity. LIC already has around 9 percent equity with us. Correspondingly, they will get this equity in the overall kitty. Today, we also approved 7 percent interim dividend to the government and the other shareholders.
Q: What is the likely NPL position in the coming quarter, in the current quarter? Is it likely to be again another Rs 1600 crore of fresh slippages and restructured, what is the pipeline looking like?
A: We want to bring down the Rs 1600 crore figure. We are seeing the bigger accounts are getting reasonably managed. If that turns out the case, the NPA level will be much below the previous quarter’s figure.
As far as restructured assets are concerned, there is a Rs 2,000 crore pipeline of CDR that needs to be looked into as to when it gets finalized.
You should note the increase in the gross profit quarter-to-quarter. Also, our provision coverage at 56 percent plus compares well to peer banks. We are right on track and our focus is on recovery and NPA reduction.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
