Indian Overseas Bank (IOB) Q4 06/07 earnings summary

Executive summary

• Total business reached ₹116,663 crore at March 31, 2007, up 35.20% YoY; net profit exceeded ₹1,000 crore for the first time, at ₹1,008.43 crore.

• The takeover of Bharat Overseas Bank added 103 Indian branches and a Bangkok branch, effective at close of business on March 31, 2007.

Financial highlights

• Net profit rose to ₹1,008.43 crore from ₹783.34 crore in FY06; reported growth was 28.7%.

• Operating profit was ₹2,036 crore before ₹476 crore investment amortisation, versus ₹1,534 crore in FY06; after amortisation, operating profit was ₹1,560 crore.

• Total income after amortisation reached ₹6,219 crore; interest earned was ₹5,832 crore versus ₹4,406 crore, while net interest income rose 24% to ₹2,561 crore.

• Interest expense increased to ₹3,271 crore from ₹2,339 crore; operating expenses rose to ₹1,388 crore from ₹1,262 crore.

• Earnings per share was ₹18.51 versus ₹14.38; total income before amortisation was ₹6,695 crore versus ₹5,134 crore.

Outlook and guidance

• FY08 GDP growth was projected at 8.5%; inflation was expected near 5%, with interest rates forecast to remain stable or ease marginally.

• Priorities for growth included new credit channels, par banking products, fee income, lower operating costs and mobilisation of low-cost funds; agriculture and SME lending were expected to gain share over retail lending.