Privatization: Indian Overseas Bank Beats PNB, BoB; Becomes India’s 2nd Biggest Govt Bank!
With a market-capitalization of over Rs 50,000 crore, The Indian Overseas Bank (IOB) became the second most-valued listed public sector bank in India on Friday.
In the past one month, the shares of the PSB has appreciated over 50 per cent on the BSE as the street discounts privatisation of the state-owned lender. With the market capitalization crossing Rs 50,000 crore-mark, it has surpassed its peers Punjab National Bank (PNB) and Bank of Baroda (BOB).
IOB Becomes Second Most-valued PSB
As per data available on BSE at 3:04 PM, IOB with an mcap of Rs 51,887 crore, has pushed PNB (Rs 46,411 crore) and BOB (Rs 44,112 crore) to third and fourth position.
As compared to the 4 per cent decline in PNB and 5 per cent gain in BOB share price, the market price of IOB has zoomed 57 per cent over a period of last one month. During the same period, in comparison, the S&P BSE Sensex was up 1 per cent.
An over four-year high of Rs 29 was hit by the stock of IOB on June 30, 2021, which is its highest level since May 2017. This came after the news of privatization of IOB and Central Bank of India, in the first phase of PSB privatisation drive. The report said that the two lenders might see 51 percent sale in the first phase of disinvestment.
The privatization plan was announced in the Union’s budget for 2021-22 as part of the government’s FY22 divestment goals. It includes the privatization of other state-owned enterprises and the listing of the Life Insurance Corporation of India as a whole.
Profits Increase & NPAs Reduce
Financially, the net IOB profit doubled to Rs 350 crore for the quarter of January-March (Q4FY21) after interest-free income. The bank had a profit of Rs 144 at the same time last year. Interest income, however, fell by 8.4 percent to Rs 1,403 crore, while interest-free income exceeded 93.5 percent to Rs 2,016 crore over the previous quarter.
The gross non-performing assets (NPAs) fell from 14.78 per cent a year ago to 11.69 per cent as the bank’s asset quality showed improvement. The net NPAs fell to 3.58 per cent from 5.44 per cent.
The bank said the board of directors had approved a capital plan for 2021-22 in which it would release stocks up to a maximum of 125 crore shares in the form of a social / rights issue. The problem could be with the government or without the participation of government or qualified consumer organizations (QIBs), the lender said.