Indian Overseas Bank Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ashok Ajmera - Ajcon Global - Analyst : Good evening, sir. [Siddhant] and the whole team of Indian Overseas Bank.

Question: Ashok Ajmera - Ajcon Global - Analyst : If you look at the performance and compare it with year on year, it's definitely a very excellent performance. But sir, if you talk about quarter on quarter, and especially on the profitability front, our operating profit has gone down from INR1,961 crores to INR1,675 crores. Mainly, one of the reasons is that other income has gone down from INR2,477 crores to INR1,033 crores, but part of it was offsetted by the employees cost of INR1,124 crores from INR2,517 crores. And it also contributed lesser recovery. I mean, in the other income, the lesser recovery from the written-off account as against INR908 crores to INR308 crores. So, sir, now there are a couple of questions on this. Number one, whether the same pattern will continue in the coming, I mean, three quarters that we are having pressure on the overall operating profit because of the lesser recovery as compared to the last quarter? And secondly, whether the employees cost, which has come down substantially, so the run rate of that is going to be in the same fashion, like if you divide it by three, so about INR375 crores per month. So that we can get some idea of going forward where do we stand on this, sir.

Question: Ashok Ajmera - Ajcon Global - Analyst : Yeah. On this other income, you see INR160 crores as compared to INR943 crores, it said all other income. In the other income, there is another head, all other income. So how it has substantially come down to INR160 crores? I do not remember exactly what happened in the last quarter when it was INR943 crores. What is the component?

Question: Ashok Ajmera - Ajcon Global - Analyst : Yes, all other income, like INR160 crores as compared to INR943 crores.

Question: Ashok Ajmera - Ajcon Global - Analyst : Yeah.

Question: Ashok Ajmera - Ajcon Global - Analyst : Sir, my next question comes on treasury only, that because of the change in the RBI stance, like on the reclassification and the valuation side of the investment book.

Question: Ashok Ajmera - Ajcon Global - Analyst : So, sir, now in the first quarter, we started with that new system. And the auditor has also given the note that general reserve would have been higher by INR1,413 crores and the ASF reserve would have been lower by INR442 crores. Investment income is lower by INR74 crores. So I am not going into the details of it, but net-net, whatever income which otherwise would have come as a treasury income, like in the other income, as a treasury gain, now a part of it is coming as an interest income, which is now with this. And other adjustments are made in the reserves only, not affecting the P&L. So what I want to know is that net-net, is there any effect on the profit and loss for the quarter, in the profit or loss of the quarter, because of this change?

Question: Ashok Ajmera - Ajcon Global - Analyst : Okay. I mean, it is only basically from the accounting perspective?

Question: Ashok Ajmera - Ajcon Global - Analyst : And sir, one question is on the advance book. If you look at the medium enterprises, book has increased by 74.81% in this quarter from INR8,960 crores to INR15,662 crores. Is it because of some reclassification or is it some group of accounts which have come together? Or what is the reason for such a large -- I mean, high increase in the --?

Question: Ashok Ajmera - Ajcon Global - Analyst : Yeah, it is a part of MSME, but if you look at it, on the slide --

Question: Ashok Ajmera - Ajcon Global - Analyst : Yeah. So is it a normal feature?

Question: Ashok Ajmera - Ajcon Global - Analyst : Okay. So as like figure looks, can we expect the total credit book to grow by about 20%, 22%?

Question: Ashok Ajmera - Ajcon Global - Analyst : Let this question be answered. Let this question be answered. So should we expect that overall credit growth maybe 20%, 22% for the way you are going in the first quarter itself?

Question: Ashok Ajmera - Ajcon Global - Analyst : In the remaining three quarters only about 8% to 9%, isn't it?

Question: Ashok Ajmera - Ajcon Global - Analyst : All right, sir. If time permits, I'll come again, sir. Okay, thank you very much and all the best.

Question: Priyesh Jain - HSBC - Analyst : Yes, thank you. Sir, my first question is to do with deposits. Could you share the split of term deposits between retail and bulk deposits?

Question: Priyesh Jain - HSBC - Analyst : Okay, sir. Sir, could you also give the YoY growth for the retail term deposits and the bulk deposits?

Question: Priyesh Jain - HSBC - Analyst : Okay, sir, fair enough. Also, like I just wanted to understand, why has the borrowings increased by 9% this quarter year on year on retail-term deposit? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 22, 2024 / 12:00PM, IOBK.NS - Q1 2025 Indian Overseas Bank Earnings Call

Question: Priyesh Jain - HSBC - Analyst : Sir, you shared the loan growth guidance, could you also share the guidance for FY 2025 for the deposits growth, the margins?

Question: Priyesh Jain - HSBC - Analyst : Okay. Those are all my questions. Thank you.

Question: Ashok Ajmera - Ajcon Global - Analyst : Thank you. Thank you for giving the opportunity again. Sir, we have been I think talking about it, even earlier also we had covered this point on note number 17 about the contingent liability on account of the income tax and the indirect tax. Now, the amount seems to be very high, very large, INR8,450 crores and INR1,146 crores. So my point has always been that, you see, in most of the other public sector banks or even some of the private banks also, if you see, this kind of item is never there anywhere. It's huge as compared to the size of the bank. So what is the status? I mean, can it be not taken at the top level with the department, with the authorities or with the court and this matter can be settled, because no provision has been made against this, as we are expecting a favorable decision on this? So can we not expedite, because when the ECL kind of thing comes, I do not know what will be the treatment required of this kind of contingent liabilities. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 22, 2024 / 12:00PM, IOBK.NS - Q1 2025 Indian Overseas Bank Earnings Call

Question: Ashok Ajmera - Ajcon Global - Analyst : Okay. Of course, because we did not find this kind of thing in the auditors note in some of the banks. I mean, you study, you can also look at it. It's very clearly mentioned in the note by the auditors in the accounts, which we somehow know because we also keep track them very closely. Anyway.

Question: Ashok Ajmera - Ajcon Global - Analyst : Okay. Sir, this CD ratio is already at 77.04%, and we are trying to grow our book also very well, credit book. So going forward, will you be comfortable with the higher CD ratio, because there is a pressure on the deposit side also? So what is your stand on that, sir?