Indian Overseas Bank (IOB) Q4 14/15 earnings summary

Executive summary

• FY15 business reached ₹4,25,090 crore, up from ₹4,09,057 crore; deposits grew while advances were broadly flat amid cautious credit growth.

• Q4 returned to profit of ₹35.50 crore from a Q3 loss of ₹516.03 crore, but FY15 ended with a net loss of ₹454.32 crore after elevated provisions.

Financial highlights

• Total income was ₹26,076.93 crore versus ₹24,853.07 crore in FY14; interest earned rose to ₹23,938.33 crore from ₹22,683.73 crore.

• Interest expense rose to ₹18,554.38 crore from ₹17,106.92 crore; operating expenses increased to ₹4,200.21 crore from ₹3,748.92 crore.

• Operating profit was ₹3,322 crore versus ₹3,997 crore; net loss was ₹454.32 crore versus net profit of ₹601.74 crore in FY14.

• Provisions and contingencies were ₹3,776.67 crore, exceeding operating profit; Q4’s ₹35.50 crore profit reflected recoveries, treasury gains and cost controls.

• EPS was -₹3.68 versus ₹6.05 in FY14; no dividend was recommended following the annual loss and failure to meet eligibility criteria.

Outlook and guidance

• Banking-system growth for FY16 was projected at 13% for deposits and 14% for advances; credit demand was expected to recover as investment and stalled-project activity improved.

• Growth priorities included SME and retail lending, CASA and NIM improvement, intensified NPA recovery, cost control and migration to a common CBS platform.

• A shareholder resolution sought authority for further issuance of up to ₹517.95 crore in shares/securities, subject to approvals and the Government of India retaining at least 52% ownership.