Indian Overseas Bank has ended the quarter and year ended March 2011 with an overall

improvement in the financial performance. The Bank has reported massive 241% increase in
the Net Profit at Rs 434.30 crore and 48% increase in the NII at Rs 1215.28,

Improved performance in Asset Quality and margins

Indian Overseas Bank has ended the quarter and year ended March 2011 with an overall improvement in the
financial performance. The Bank has reported massive 241% increase in the Net Profit at Rs. 434.30 crore and 48%
increase in the NII at Rs. 1215.28 crore for the quarter ended March 2011. NIM stood at 3.16% in quarter against
2.84% in the corresponding previous year. The deposits and advances grew faster than the Industry and the asset
quality has also improved.
Asset Quality:

 Gross NPA has declined by 14% on y-o-y basis and 5% on q-o-q basis to Rs. 3089.59 crore. Cash
recoveries are to the tune of Rs. 771 crore, Up gradations Rs. 688 crore, Write offs Rs. 816 crore for FY11.
The bank has sold Rs. 415 crore of assets to Asset restructuring companies in FY11. The % GNPA has
slipped to 2.72% against 4.47% a year ago and 3.26% a quarter ago.
 The Net NPA on the other hand, has declined by 33% on y-o-y basis and 11% on q-o-q basis to Rs. 1328.42
crore. The %NNPA stood at 1.19% against 2.52% a year ago and 1.51% a quarter ago.
 The bank has calculated system based NPA's for loan limit of Rs. 1 crore and above for the period ended
March 11. Full system based NPA calculation will be achieved by end of September 2011. Provision
coverage ratio at end of March 11 stood at 70.45%.

Business Highlights:

 Total business grew from Rs. 19577 crore at end of March 10 against Rs. 259020 crore at end of March 11
recording growth of 35% on y-o-y basis. On sequential basis business grew by 15% with deposits up by
16% and advances by 14%.
 Deposits outperformed the industry and grew by 31% from Rs. 110795 crore at end of March 10 to Rs.
145229 crore at end of FY11. CASA ratio stood at 30.20% at end of March 11.
 Advances grew by 41% to Rs. 113791 crore at end of March 11 against Rs. 80782 crore in the corresponding
previous year.
 Credit Deposit ratio stood at 78.35% against 72.91% a year ago.
 NIM for the quarter and year improved from 2.74% for FY10 to 3.11% for FY11. NIM for the quarter stood at
3.16% against 2.84% in the corresponding previous quarter.
 Capital Adequacy ratio has improved to 14.55% with Tier I capital of 8.16% at end of March 11 against
13.28% with Tier I capital of 7.44% in the corresponding previous year. The bank has raised Rs. 1054 crore
by allotment of shares to GOI and has raised Tier II bonds to the tune of Rs. 1967crore in FY11. The total
capital funds have improved from Rs. 11721.20 crore at end of FY10 to Rs. 15255.90 crore at end of FY11.
 Business per employee has increased from Rs. 7.12 crore at end of FY10 against Rs. 10.05 crore at end of
FY11. Profit per employee has also inched up to Rs. 4.16 lakh against Rs. 2.63 lakh in the corresponding
previous quarter.
 Return on Average assets increased from 0.53% in FY10 to 0.71% for the FY11.
 Book Value per share has stood at Rs. 111.89 at end of March 10 against Rs. 121.21 at end of March 11.
 The board has recommended dividend of Rs. 5 per equity share, of Rs. 10 face value for FY11.

Quarterly Performance:
For the quarter ended March 11, IOB has reported splendid results with massive 241% rise in the Net Profit at Rs.
434.30 crore over 48% increase in NII at Rs. 1215.28 crore. Interest earned inched up by 39% to Rs. 3532.11 crore on
the back of 40% rise in the Interest on advances at Rs. 2615.64 crore. On the other hand, Interest expended
increased by 34% to Rs. 2316.83 crore. NIM stood increased to 3.16% in the quarter under review. The other income
has increased by 36% to Rs. 384.47 crore and led Net total income up by 45% to Rs. 1599.75 crore. The other income
as % of net total income has declined by 150 bps to 24% in quarter under review.
The employee cost has declined by 16% to Rs. 362.65 crore and that of other expenses by 21% to Rs. 260.15 crore
totaling operating expenses down by 4% to Rs. 622.80 crore. As per AS 15 standards, the bank has provided
provision of liability of Rs. 21.50 crore, additional Gratuity fund requirement of Rs. 49.31 crore in the quarter under
review. As per the second pension one-fifth of the additional pension fund liability of Rs. 758.65 crore towards serving
employees, who exercised second option and 100% of such liability of Rs. 188.28 crore towards retired /separated
employees aggregating to Rs. 340.01 crore has been charged to P&L for FY11. However, the bank has charged Rs.
324 crore for the same before actuarial calculation at end of December 2010. Thus the bank has just witnessed lower
employee cost in the quarter under review.
The cost to Income ratio has sharply declined to 38.9% from 58.7% in the corresponding previous quarter. Thus,
operating Profit surged up by 114% to Rs. 976.95 crore. Further, Provisions and contingencies reported marginal fall
of 3% to Rs. 446.02 crore while that of the tax outgo was to the tune of Rs. 96.63 (against income of Rs. 131.69 crore
in the corresponding previous year). Resultantly, Net Profit surged up by 241% to Rs. 434.30 crore.
Yearly Performance:
For the year ended March 11, IOB has reported 33% increase in NII at Rs. 4208.03 crore and 52% increase in the Net
Profit at Rs. 1072.54 crore. Other income marginally inched up by 7% to Rs. 1225.10 crore and paved Net Total
Income up by 26% to Rs. 5433.13 crore. Sharp decline in cost to income ratio by 980 bps to 47.3% has resulted
Operating Profit up by 55% to Rs. 2860.63 crore. Finally 62% increase in provisions and contingencies to Rs. 1705.92
crore has resulted Net Profit up by 52% on y-o-y basis.
Other information:

 The scrip is hovering at Rs. 152.40 on BSE.

 Considering EPS of Rs. 17.3, PE stands at 8.8 times.
 As per our calculation, at Book value per share of Rs. 132.0 and Adjusted Book Value per share of Rs. 82.3
at end of March 2011, the P/BV and P/ABV works out to be 1 and 1.5 respectively.

Indian Overseas Bank: Financial Results

 
Particulars 1103 (3) 1003 (3) Var % 1103 (12) 1003 (12) Var %
Interest Earned 3532.11 2547.83 39 12101.47 10245.77 18
Interest Expended 2316.83 1727.42 34 7893.44 7077.91 12
Net Interest Income 1215.28 820.41 48 4208.03 3167.86 33
Other Income 384.47 281.97 36 1225.10 1143.25 7
Net Total Income 1599.75 1102.38 45 5433.13 4311.12 26
Operating Expenses 622.80 646.80 -4 2572.49 2466.50 4
Operating Profits 976.95 455.58 114 2860.63 1844.62 55
Provisions & Contingencies 446.02 459.82 -3 1186.24 783.49 51
PBT before EO 530.93 -4.24 LP 1674.40 1061.13 58
EO 0.00 0.00 0 -82.17 -82.17 0
PBT 530.93 -4.24 LP 1592.23 978.96 63
Current Tax 96.63 -131.69 LP 519.68 272.00 91
Net Profit 434.30 127.44 241 1072.54 706.96 52
EPS*(Rs) 28.1 8.2 17.3 11.4
* Annualized on current equity of Rs. 618.75 crore. Face Value: Rs. 10
Figures in Rs. crore
LP : Loss to profit ; PL : Profit to loss
Source: Capitaline Corporate Database