Indian Overseas Bank (IOB) was founded in February 1937 with twin objectives of specializing in foreign exchange business and overseas banking. It started out with three branches located at Karaikudi and Chennai in India and Rangoon in Burma (presently Myanmar).
Key Highlights of Business
- 82 years in the service of Banking.
- Strong Domestic presence of 3280 Branches & 3450 ATMs.
- 57% of Branches catering to the needs of Rural and Semi-Urban centers enhancing deeper Financial Inclusion.
- 2705 Business Correspondents provide extended reach.
- A strong Brand name in South India especially in the State of Tamil Nadu.
- Trust of 36 million active customers.
- Overseas Presence with 6 branches and 1 Representative Office.
- Sustained Growth in Low-cost CASA deposits.
- Improved performance in Retail, Agri and MSME Segments contributing to 67.20% of Domestic Advances
IOB Business Performance
IOB Financial Information
IOB Quarterly Results
IOB has shown negligible growth in business in the last 3 years. Almost all quarters are flat and there is a considerable increase in expenses. It could be mainly due to high provisioning by the bank considering the increase in NPAs.
Apart from this, the bank has negative ROE and heavy degrowth in PAT.
It is interesting to note that IOB is not making any profit in the last 3 years and in fact, its losses are consistently increasing QoQ. Looking at this increasing number it is very difficult to say how long business can be sustainable.
Shareholding Pattern of IOB
The government of India is the largest promoter of IOB and it holds around 95.84%. GOI has increased its stake in the last few years by recapitalization of IOB.
Foreign and domestic institutions are consistently decreasing their stake in the bank.
Capital Infusion in IOB during last 3 years
In the last few years, the government of India is consistently infusing money in all public sector banks by recapitalization and IOB has also received a considerable amount of money.
In the last fiscal year 19-20, IOB has received around 12,292 Crores from GOI. Due to capital infusion, the bank has been able to smoothly perform its business.
Dec 2019: 4360 Crores
Aug 2019: 3800 Crores
Mar 2018: 4132 Crores
Future Outlook
Currently, the outlook of the bank is very negative. The stock market has already factored this thing and the stock was trading near 7 Rs a few weeks ago.
Recently there have been rumors that IOB will be privatized and GOI will be selling its stake to some private entity. This news is not confirmed by the bank but it is neither denied by GOI.
Due to this rumor, the stock price has shot up by 40% in the last 1 week.
An investor should be cautious of such moves as such stock movements could be entirely speculative in nature.
Until bank business prospects improve, it doesn’t make any sense for any investor to invest in the underperforming company.
Technical Analysis of the Stock
The stock has seen a strong reversal from 7 which was yearly support on charts.
There have been significant price and volume movements in the stock in the last 2 weeks. Currently, the stock is forming a bottom and it will be complete once stock closes above 11 on weekly charts.
IOB is a weak stock therefore, traders should not take any heavy position and the current move could be entirely speculative in nature.
