Indian Overseas Bank (IOB) has announced a 17% increase in net profit for the fourth quarter ended March 31, 2023, as compared to the corresponding quarter of the previous year. The bank’s net profit for the quarter was reported at Rs 650 crore, up from Rs 552 crore during the same quarter in 2022. The bank’s net interest margin during the quarter stood at 3.2%, which is a healthy sign for the bank’s profitability.
The bank’s net profit for the entire financial year ended March 31, 2023, increased by 22% to Rs 2,099 crore, compared to the previous fiscal year’s net profit of Rs 1,709 crore. The bank’s profit growth was supported by robust operational performance, including healthy loan growth, improved asset quality, and higher net interest income.
IOB’s total deposits for the financial year 2022-23 stood at Rs 2,60,883 crore, marking a marginal decline of around 0.5% compared to Rs 2,62,159 crore in the previous fiscal year. However, the bank’s overall asset quality improved with gross non-performing assets (GNPAs) reducing to 8.78% in March 2023, from 9.98% a year ago. Net NPA also decreased to 2.67% from 3.87% during the same period.
IOB has been taking various measures to improve its asset quality, including focusing on recoveries and containing fresh slippages. The bank’s provisions during the fourth quarter rose by 28% to Rs 1,377 crore, compared to Rs 1,076 crore in the same period last year.
IOB’s strong financial performance in Q4 can be attributed to a significant increase in its net interest income. According to the bank’s statement, net interest income (NII) grew by 27.6% year-on-year (YoY) to Rs 1,885 crore in the March quarter, up from Rs 1,478 crore in the same quarter last year. The bank’s net interest margin (NIM) for the quarter stood at 3.2%, an improvement from 2.7% a year ago. This indicates that the bank has been able to efficiently manage its assets and liabilities to generate higher interest income.
In addition to NII, IOB’s other income also witnessed a strong growth of 31% YoY to Rs 1,048 crore in Q4. This was mainly driven by a significant increase in fee-based income, which grew by 38.8% YoY to Rs 842 crore. However, the bank’s operating expenses increased by 13.8% YoY to Rs 1,728 crore, which could be a cause for concern in the future.
IOB is also focusing on growth opportunities in the retail segment and has been expanding its digital offerings to attract new customers. The bank has been offering various digital services to its customers, including internet banking, mobile banking, and e-wallets.
IOB’s Managing Director and CEO, Partha Pratim Sengupta, said that the bank’s focus is on driving business growth through increased customer-centricity, digitalization, and continuous process improvement. The bank aims to leverage its strengths in technology and customer service to provide superior services to its customers.
IOB’s shares closed at Rs 25.15 on Friday, up 3.96% from the previous day’s close, after the announcement of the positive financial results. The bank’s strong performance has been appreciated by investors, and analysts are bullish on the bank’s growth prospects in the coming quarters.
IOB’s board of directors has recommended a dividend of Rs 1 per share for the financial year ended March 31, 2023, subject to the approval of the shareholders. This marks the first time in several years that the bank has declared a dividend. The bank has also announced its plans to raise up to Rs 3,000 crore through the issuance of equity shares or other securities in the current financial year to augment its capital base.
Overall, IOB’s strong financial performance in the March quarter and the full financial year is a positive sign for the bank. Despite facing headwinds from the pandemic and the challenging economic environment, the bank has been able to manage its assets and liabilities efficiently to generate higher interest income. The bank’s plans to raise capital and improve its asset quality are also encouraging signs for investors.
