Indian Overseas Bank (IOB) Q4 18/19 earnings summary

Executive summary

• FY19 operating profit rose 38.71% to a record Rs. 5,033.87 crore; net loss narrowed 40.66% to Rs. 3,737.88 crore, with Rs. 8,772 crore of provisions during the year.

• Total business reached Rs. 3,74,530 crore, up from Rs. 3,67,831 crore at March 2018, as the balance sheet was rebalanced toward RAM lending and lower-cost deposits.

Financial highlights

• Total income was Rs. 21,837.58 crore vs. Rs. 21,661.65 crore YoY; interest income fell to Rs. 17,631.26 crore from Rs. 17,915.21 crore.

• Non-interest income increased 12.28% to Rs. 4,206.32 crore; operating expenses declined to Rs. 4,451.58 crore from Rs. 5,584.93 crore.

• Deposits rose to Rs. 2,22,534 crore from Rs. 2,16,832 crore; gross advances were Rs. 1,51,996 crore vs. Rs. 1,50,999 crore at March 2018.

• Gross NPAs fell to Rs. 33,398 crore, or 21.97%, from Rs. 38,180 crore, or 25.28%; net NPAs were Rs. 14,368 crore, or 10.81%.

Outlook and guidance

• FY20 priorities include sustaining or improving performance, reducing NPAs, increasing RAM’s credit share, conserving capital and lowering risk-weighted assets.

• Banking-sector credit growth was forecast at 14% for FY20 vs. 13% in FY19, supported by retail and services; corporate credit was expected to recover gradually.

• The outlook also called for stronger risk management, end-to-end automation, improved customer service and continued investment in staff development and digital delivery.