Indian Overseas Bank (IOB) Q4 00/01 earnings summary

Executive summary

• FY2000-01 net profit rose to Rs.115.93 crore from Rs.40.34 crore, despite extraordinary VRS expenses; operating profit after VRS cost was Rs.306.60 crore vs. Rs.188.23 crore.

• Deposits, net advances and investments grew; net NPA ratio eased to 7.01% from 7.65%, while capital adequacy strengthened to 10.24% from 9.15%.

Financial highlights

• Total income increased to Rs.3,095.83 crore from Rs.2,770.76 crore; interest income rose Rs.288.9 crore and other income Rs.36.2 crore.

• Interest expense was Rs.1,912.67 crore vs. Rs.1,826.26 crore; operating expenses reached Rs.876.56 crore vs. Rs.756.27 crore, mainly reflecting VRS costs.

• Total provisions and contingencies were Rs.190.68 crore vs. Rs.147.89 crore; NPA provisions were Rs.155.77 crore. Net profit after provisions was Rs.115.93 crore vs. Rs.40.34 crore.

• Net interest margin exceeded 3%; deposit cost declined ~0.4 percentage points, while operating profit to working funds improved to 1.04% from 0.70%.

Outlook and guidance

• Further VRS expenses were expected in FY2001-02; confidence in higher net profit was tied to business-volume growth and improved asset quality.

• Retail and household business were strategic priorities to protect net interest margin and support future profitability; a 10% annualised dividend was proposed, subject to approval.