Mumbai, Feb 9 (PTI) State-owned Indian Overseas Bank on Thursday reported a 22 per cent growth in net income at Rs 555 crore for the December 2022 quarter, driven by a 44 per cent increase in interest income and improved asset quality.

The Chennai-based bank's total income rose to Rs 6,006 crore in the quarter from Rs 5,317 crore a year-ago, of which net interest income increased by 44 per cent to Rs 2,272 crore from Rs 1,572 crore, Ajay Kumar Srivastava, managing director of the bank who took over only last month, told reporters.

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The key profitability gauge, net interest margin, which is the difference between what it earns from lending after paying interest on its funds, jumped 71 basis points to 3.27 per cent, boosting the bottom-line.

Srivastava said the asset quality improved overall with gross NPAs (non-performing assets) declining to 8.19 per cent on-year from 10.4 per cent, and net NPAs easing to 2.43 per cent from 2.63 per cent.

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As a result, provisions for bad loans declined to Rs 711 crore from Rs 937 crore.

This had the provision coverage ratio increasing to 91.34 from 90.94, he said, adding, however, the capital adequacy ratio declined marginally to 15.16 per cent as against 15.41 per cent.

Led by corporate loans, which grew 20 per cent, its total advances rose 18 per cent while deposits growth was 9 per cent.

During the quarter, the bank had Rs 1,700 crore of fresh slippages, primarily led by Rs 700 crore account defaulting due to a court case, but the management said by March the slippage ratio will be brought under 1 per cent, as guided in the beginning of the year.

On the other hand, recovery has been much better at Rs 2,000 crore in the quarter taking the total recovery to Rs 3,200 crore. The bank had budgeted for Rs 4,500 crore for recovery. Of the quarterly recovery of Rs 2,000 crore, Rs 370 crore came from written off accounts, he said.

Srivastava further said, the bank is sitting on a whopping Rs 30,000 crore written off accounts, and has set a target of recovering Rs 1,000-1,500 crore every year. The target for Q4 is Rs 1,300 crore, he said, adding, he does not see any issues regarding the asset quality, except maybe for the education loan book.

The bank had cash recovery of Rs 710 crore in the quarter, of which Rs 400 crore came from written-off accounts.

On slippages, he said the education loan is the worst hit, with the fresh slippage during the third quarter being at Rs 200 crore, which is as much as 80 per cent of its retail book slippages. So far this year, the bank added Rs 600 crore of dud loans from its Rs 4,000-crore education loan book, Srivastava said.

The bank has net disbursed Rs 2,500 crore in gold loans, taking the book to Rs 37,000 crore.

From the asset side, 72 per cent of the assets are in the RAM (retail, agriculture and MSMEs), and 22 per cent in the corporate portfolio.

The IOB counter gained 93 basis points to close at Rs 27.15 on the BSE whose benchmark Sensex settled 33 basis points up after a see-saw trade.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)