Indian Overseas Bank (IOB) Q4 04/05 earnings summary

Executive summary

• FY05 delivered higher net profit and record credit growth, despite lower treasury earnings, elevated deposit costs and wage-arrears provisions.

• Global deposits rose to ₹44,241.2 crore and net advances to ₹25,205.2 crore; operating profit reached ₹1,336.80 crore.

Financial highlights

• Total income was ₹4,590.85 crore vs ₹4,494.76 crore in FY04; interest income increased to ₹3,951.05 crore from ₹3,754.10 crore.

• Net interest income rose to ₹1,855.52 crore from ₹1,599.41 crore; net profit increased 27% to ₹651.36 crore from ₹512.76 crore.

• Operating profit was ₹1,336.80 crore vs ₹1,325.20 crore; excluding net investment-sale gains and investment revaluation effects, core operating profit was ₹1,123.50 crore vs ₹923.26 crore.

• Interest expense declined to ₹2,095.53 crore from ₹2,154.69 crore, while operating expenses rose to ₹1,158.52 crore from ₹1,014.87 crore, mainly on staff and retirement-benefit costs.

• Provisions and contingencies were ₹685.44 crore; EPS was ₹11.96 vs ₹10.40, and proposed final dividend of 10% plus interim dividend of 14% took FY05 total to 24%.

Outlook and guidance

• FY06 GDP growth expectations ranged from about 7% in the Executive Director’s outlook to about 8% in the Management Discussion; industry and services were expected to remain strong.

• Higher credit growth was expected to be needed in FY06; the outlook also anticipated soft interest rates and stable prices.

• Planned GDR issuance was intended to support capital adequacy, asset growth and expansion, subject to statutory approvals.