Indian Overseas Bank shares hit 11-year low on disappointing Q2 results
Shares fell after the bank reported that net loss for the September quarter more than doubled to Rs550.83 crore from Rs245.51 crore in the year-ago period
Mumbai: Shares of Indian Overseas Bank hit an 11-year low on Monday after the bank reported net loss for the September quarter.
In intra-day trade, the stock fell as much as 15.6% and hit a low of ₹ 29.55, a level last seen on 29 September 2004.
On Saturday, the bank reported that net loss for the September quarter more than doubled to ₹ 550.83 crore from ₹ 245.51 crore in the year-ago period, as it had to set aside higher provisions against an increase in bad loans.
Gross non-performing assets (NPAs) at the bank rose to 11% at the end of September compared to 7.35% at the end of the June quarter. Provisions on account of bad loans increased 74% to ₹ 1,558 crore from a year ago. Post provisioning, net NPAs were at 7.41% versus 5.17% in the June quarter.
Net interest income, or the core income a bank earns from its lending business, was flat at ₹ 1,398 crore compared with ₹ 1,344 crore a year ago.
On 5 October, the bank informed exchanges that the Reserve Bank of India has initiated a “prompt corrective action” on the bank to improve internal controls and consolidate its business activities. Such measures are taken against the backdrop of a surge in bad loans.
Shares of IOB closed at ₹ 31.05 on the BSE, down 11.29% from its previous close, while the benchmark Sensex index fell 0.37% to 26,559.15 points.
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