State-run Indian Overseas Bank (IOB), which came out of the RBI’s prompt corrective action (PCA), has reported a 2.5-fold jump in net profit for the fiscal second quarter ended September to Rs 376 crore compared to Rs 148 crore a year ago.

As net interest margin (NIM) is under pressure due to banks lowering interest rates on account of competition, IOB has put focus on mobilising low-cost CASA (current account savings account) deposits. CASA constituted 42.57% of the bank’s total deposits in the September quarter from 40.26% a year ago.

NIM for the September quarter stood lower at 2.43% from 2.57% a year ago.

Treasury income is expected to rise in the next quarter amid higher government spending, which is likely to bring bond yields down. 

Interest income for the quarter stood at Rs 4,254 crore, down 2.5% from Rs 4,363 crore in the year-ago quarter. 

Total income stood at Rs 5,376 crore versus Rs 5,431 crore a year ago.

Operating profit grew 5.4% to Rs 1,419 crore, as other income rose 5% to Rs 1,121 crore.

The bank’s provisioning for bad loans and contingencies fell to Rs 1,036 crore during the quarter compared to Rs 1,192.55 crore a year ago. 

The asset quality of the bank improved with the net non-performing assets (NPA) falling to 2.77% of the net advances in the fiscal second quarter versus 4.3% a year ago. Gross NPAs fell to 10.66% (Rs 15,666 crore) from 13.04% (Rs 17,660 crore).

The bank recovered Rs 291 crore Dewan Housing Finance Corporation (DHFL) out of a total of Rs 832 crore in the quarter.

IOB’s gross advances grew 8.5% year-on-year to Rs 1.47 lakh crore.