Indian Overseas Bank shares in focus on report PSU lender may sell Rs 457-crore MSME NPAs

Shares of Indian Overseas Bank Ltd (IOB) will be in focus on Thursday morning as the state-run bank has reportedly put a Rs 457-crore portfolio of non-performing assets (NPAs) on the block. As per a report by ET, the Chennai-based is expecting a minimum of 60 per cent recovery from the micro, small and medium enterprises (MSME) NPAs, with half of it in cash.

IOB shares have fallen 5 per cent in the last five sessions but are still up 63 per cent in the six-month period.

As per the ET report, the PSU bank's portfolio includes 91 MSME loan accounts with outstanding anywhere between Rs 3 crore and Rs 10 crore. The bank, the report said, set a Rs 274 crore reserve price, which is 60 per cent of the total outstanding, of which it expects at least half, or Rs 137 crore, in cash.

"Preference will be given to bids or offers with a higher cash portion...management fee would be 1.5% per annum of net assets value... for first three years, 1.25% for the fourth, fifth and 0.75% for the sixth year onwards," ET reported the lender as saying while inviting bids from asset reconstruction companies, banks and alternative investment funds.

IOB had reported net non-performing asset (NPA) of Rs 1,364 crore for the September quarter, with net NPA ratio of 0.68 per cent. This was against Rs 4,148 crore in net NPA and an net NPA ratio of 2.56 per cent in the same quarter last year.

The bank recently increased its Base Rate by 35 bass points with effect from November 15. The effective base rate will be 9.45 per cent until further review, it informed stock exchanges on November 13.

IOB reported a 24.75 per cent YoY rise in net profit at Rs 625 crore for the September quarter compared with Rs 501 crore in the year-ago period. Interest income for the bank came in at Rs 5,821 crore compared with Rs 4,718 crore in the same period last year.

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