Indian Overseas Bank (IOB) Q4 02/03 earnings summary

Executive summary

• FY03 delivered higher operating and net profit, with deposits and advances growing faster than the banking-system average.

• Net profit rose to Rs.416.10 crore from Rs.230.21 crore; proposed dividend was 16%.

• Net interest income and margin improved, while NPA recovery, technology expansion and cost control remained key priorities.

Financial highlights

• Total income increased to Rs.4,005.8 crore from Rs.3,701.5 crore; interest income rose Rs.315.2 crore, while other income declined to Rs.519.9 crore from Rs.530.8 crore.

• Operating profit reached Rs.794.13 crore versus Rs.616.36 crore; net profit was Rs.416.10 crore, up 80.7% YoY.

• Net interest income increased to Rs.1,221.5 crore from Rs.970.1 crore; interest cost rose Rs.63.8 crore.

• Provisions and contingencies were Rs.378.03 crore versus Rs.386.15 crore; staff costs included a Rs.62.73 crore leave-encashment charge.

• Total deposits were Rs.36,698.6 crore and global net advances Rs.17,447.0 crore at March 2003; net investments reached Rs.18,603.0 crore.

Outlook and guidance

• Target asset growth of 15%–18% in coming years; expected to expand business volume and fee activities while using technology to reduce operating costs.

• Profit margins were expected to face increasing pressure; strategy centered on higher volumes, trading and other activities, and operating-cost reduction.

• FY04 Indian GDP growth was projected at 6%, with agriculture growth of 4% on improved monsoon prospects.