Indian Overseas Bank to not raise capital before April next year

Kolkata: Indian Overseas Bank said it is not looking to raise capital before April next year as it expects muted credit growth amid economic contraction.

Chief executive Partha Pratim Sengupta said that his first target would be to improve the bank's balance sheet and remain profitable in the next two quarters before knocking investors for capital.

This is despite a dip in its capital adequacy ratio to 10.9% at the end of September from 11.86% a year back and a board approval for Rs 5000 crore capital raising.

Operating profit rose 80% at Rs 1346 crore for the quarter under review compared with Rs 746 crore in the year ago period.

The bank which has made net profit for the last three quarters and improved other parameters to technically exit the prompt corrective action (PCA) framework has also decided against making an appeal to remove the restrictions as the next two quarters may throw fresh asset quality challenges on account of the Covid-19 pandemic-related stress

"We are not making an appeal to RBI for an exit from the PCA framework because we want to see the impact of Covid-19 on the balance sheet, Sengupta said, adding that the impact may largely be felt on the December and March quarter.

IOB is expecting advances to grow by 4-5%, led by the retail, agri and MSME sectors, which contributed 74% of its Rs 1.36 lakh crore loan portfolio. The bank's advances portfolio shrank 5.5% over the years as it "consciously de-grew corporate loan book", the CEO said.