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NT Bureau
Chennai, Feb 4:

        Indian Overseas Bank has shown higher operating/ net profits during the third quarter backed almost by 45 per cent increase in its interest income from core operations.

        Interestingly, the bank has registered a growth of 34.21 per cent in operating profit with Rs 491.56 crore in the third quarter as against Rs 366.25 crore in the last fiscal. It had a net profit of Rs 246.78 crore, an increase of 25.13 per cent.

        During the quarter, aggregate deposits rose by 19.84 per cent from Rs 43,397 crore to Rs 59,200 crore while gross credit rose by 38.89 per cent from Rs 31745 crore to Rs 44089 crore when compared to same period last year. Cash deposit ratio stood at Rs 74.48 per cent as of December 2006.

        Total business of the bank which was at Rs 81142 crore as of December 2005 rose sharply by 27.29 per centto reach Rs 1,03,289 crore as on 31 December, 2006. Non interest income other than treasury gains increased by 26.91 per cent from Rs 124.04 crore in third quarter last year to Rs 157.42 crore in third quarter this year. Of this, other income from core banking operations increased by 31.78 per cent from Rs 68.03 crore to Rs 89.66 crore while fee income from sale of insurance and mutual fund products and merchant banking business rose by 15.10 per cent from Rs 38.14 crore to Rs 43.90 crore during the quarter.

        In precious metals operations including sale of retail gold launched early this year, registered remarkable growth from Rs 0.11 crore last year to Rs 1.90 crore during third quarter of this year. Forex treasury income of the bank registered a growth of 33.10 per cent during the quarter while profit on sale of securities recorded a growth of 12.97 per cent.

        On the operating margings, net interest margin at 3.72 per cent as against 3.94 per cent as of third quarter last year has to be seen in the backdrop of rising cost of resources and a general rising interest rate environment. IOB is stil able to maintain its lead among all the banks in this respect despite a tough competition for resources. The yield on advances rose from 9.08 per cent last year to 9.46 per cent in third quarter.

        Cost of deposits rose from 4.80 per cent to 5.34 per cent in the third quarter, a phenomenon witnessed by many banks during this year, due to general rise in demand for resources. In order to meet the need the to build medium to long term assets and to strengthen stability of the deposit base, the bank recorded a higher growth in term deposits.

        All other other key parameters witnessed improvement when compared with third quarter of last year——return on average assets improved from 1.36 per cent to 1.38 per cent, book value per share improved from Rs 55.29 to Rs 69.27 and return on net worth remained almost same at 27.04 per cent.

        As a matter of fact, the bank's gross NPA reduced in real terms from Rs 1406 crore in December 2005 to Rs 1121.61 crore , a reduction of 20.23 per cent over the last year. In percentage terms, the ratio was 2.54 per cent as against 4.43 per cent for the same period last year.

        Net NPA stood at 0.48 per cent as against 0.78 per cent in December 2005 and NPA coverage stood at 81.59 per cent. And the yield on investments declined from 8.44 per cent to 8.16 per cent.