IOB

IOB numbers for Q4FY13 were a real shocker. It was the top loser on the BSE yesterday, tanking over 5% and it also hit a new 52-week low at Rs.62.20. During market hours, the bank reported a whopping 89% (YoY) drop in net profit at Rs.59 crore. And this was most unexpected as analysts had estimated net profit for the quarter to come in at around Rs.400 crore. Its NII also was on the decline, down over 3% at Rs.1300 crore.  Thankfully, the bank had a tax write back of Rs.100 crore and this is what helped the  bank stay in the black, or else it would have reported a net loss.

The entire blame for the poor performance can be laid fair and square on increased provisions. It rose over three times  to Rs.1187 crore, up from Rs.388 crore in Q4FY12. Its Gross NPA increases from 2.74% to 4.02% and the rise in Net NPA was also substantial, from 1.35% to 2.5%. The bank is sure to have restructured  quite a few corporate loans, to the tune of Rs 15607 crore to Rs 18049 crore and Suzlon, Suryajyoti, Moser Baer, Rolex, Nitco , Sujana, Mahavir Ferro Alloys and Tamil Nadu Electricity being some of them.  The bank expects NPAs to start tapering off after Q2FY14, which means we will continue to some more pain in the coming few months but it stated that this high provisioning in Q4 could be a one-off occurrence.