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 INDIAN OVERSEAS BAN
PERFORMANCE ANALYSIS OF IOB

PROFITABILITY ANALYSIS

Total Assets
Earning Assets
Balances with RBI
Balances with Banks in Deposit Accounts
Balances with Banks & money at Call & Short Notice
Balances with Banks Outside India
Investments +
Advances +
Total Earning Assets
Interest bearing Liabilities
Saving Deposits
Term & Other Deposits
Borrowings
Subordinated Debt
Total Interest bearing liabilities

Equity Capital
Reserves
Total Equity
Interest Income
Interest Expenditure
Non-interest operating income
Non-interest operating Expenditure
Provisions and Contingencies
Provisions and Contingencies include provision for tax
Profit After tax
NPA
Provisions for NPAs
NI or PAT
Total Tax Paid

Profitability Ratios
Return on Assets= NI/ TA
Equity Multiplier TA/ TE
TE/ TA
ROE=ROA X EM

NI/ OR
OR/ TA
TA/ TE

(II - IE)/ TA
(OI-OE)/ TA
Provisions/TA
ROA

(II- IE)/E A
EA/ TA
(II - IE)/ TA

NIM
II/ EA
IE/ Intt Bearing Liab
Intt Bearing Liabilities/ EA
Spread

Efficiency ratio= Non intt exp/ (Net Interest Income+Non intt income)

Risk Ratios
Liquidity Risk= Short term securities/ Deposits
Interest Rate Risk = Interest Sensitive Assets/ Interest Sensitive Liabilities
Credit Risk = Provisioning / Assets
Capital Risk = Capital / Assets
Leverage ratio= Total equity/Total assets
Total capital ratio= (Total equity + Long-term debt + Reserve for loan losses)/Total assets

Provision for loan loss ratio= PLL/ TL (provision for loan losses/total loans and leases)
Loan Ratio = Net loans/ Total assets
Loss Ratio = Net charge-offs on loans (gross charge-offs minus recoveries)/ Total loans and leases
Reserve Ratio = Reserve for loan losses (reserve for loan losses last year minus gross charge-offs plus PLL and
recoveries)/Total loans and leases

Nonperforming ratio= Nonperforming assets (nonaccrual loans and restructured loans)/Total loans and leases

Operating efficiency (cost control)= Wages and salaries/Total expenses

Volatile liability dependency ratio= (Total volatile liabilities - Temporary investments)/Net loans and leases
Other Financial Ratios
Tax rate = Total taxes paid/Net income before taxes
Gap ratio = (Interest rate-sensitive assets – Interest rate-sensitive liabilities)/ Total assets

CONCLUSION:
By concluding various factors after looking at the performance analysis which has been calculated with the help
1. IOB is suffering from huge losses from the last few years and because of which it is also finding it difficult to m
2. Because of the huge losses, the bank is unable to utlise their assets allocation to their fullest capacity depictin
3. Hence, majority of the ratios of IOB are in negative value which concludes that proper management needs to
ANK

Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

₹ in Crore ₹ in Crore ₹ in Crore ₹ in Crore ₹ in Crore

274,473.10 247,180.94 247,972.50 250,008.37 260,726.84

486,811.00 446,679.00 444,512.00 452,955.00 447,762.00
14,033.49 11,499.97 11,579.00 10,292.53 3,155.22
218,555.80 205,153.96 210,388.00 217,962.67 218,028.21
8,212.74 11,723.07 14,966.00 20,598.97 20,905.00
5,958.44 6,188.67 6,444.00 4,571.00 4,924.00
79,189.55 71,654.12 68,646.00 66,932.00 79,416.00
160,860.67 140,459.62 132,489.00 132,598.00 121,333.00
486,810.69 446,679.40 444,511.55 452,955.48 447,762.02

52,403.60 63,231.57 66,742.00 70,652.00 75,572.00

160,028.82 135,074.07 137,154.00 137,307.00 133,201.00
27,183.31 16,097.67 9,228.00 6,146.00 5,420.00
234,000.00 239,000.00 239,000.00 239,000.00 260,000.00
473,615.72 453,403.31 452,124.36 453,104.99 474,192.28

1,807.27 2,454.73 4,891.00 9,142.00 16,437.00

13,858.55 11,289.82 8,383.00 7,218.00 -282.00
15,666.00 13,745.00 13,274.00 16,360.00 16,155.00
23,517.29 19,718.60 17,915.00 17,631.00 17,406.00
18,135.00 14,529.00 12,448.00 12,352.00 12,103.00
2,528.00 3,373.00 3,746.00 4,206.00 3,360.00
5,025.00 4,912.00 5,585.00 4,452.00 5,129.00
5,782.78 7,703.96 11,883.42 11,628.61 15,399.44
0.00 637.01 1,954.84 2,856.86 3,338.36
-2,897.33 -3,416.74 -6,299.49 -3,737.88 -8,527.40
30,048.62 35,098.26 38,180.15 33,398.12 19,912.70
7,348.27 14,149.97 17,333.78 18,647.23 11,074.20
-2,897.00 -3,417.00 -6,299.00 -3,738.00 -8,527.00
-830.78 35.82 -2,332.21 -2,222.66 182.92

-0.01 -0.01 -0.03 -0.01 -0.03 Return on assets tells that how muc
 17.52 17.98 18.68 15.28 16.14 The equity multiplier states the leve
0.06 0.06 0.05 0.07 0.06 The proprietary Ratio has been incre
-0.18 -0.25 -0.47 -0.23 -0.53 ROE measures the level that the com

-0.11 -0.15 -0.29 -0.17 -0.41 This ratio states the total percentag
0.09 0.09 0.09 0.09 0.08 The asset utilization ratio indicates t
17.52 17.98 18.68 15.28 16.14 The equity multiplier states the leve

0.02 0.02 0.02 0.02 0.02 Since banks basic source of earning
-0.01 -0.01 -0.01 0.00 -0.01 This ratio is indicator to show the he
0.02 0.03 0.05 0.01 0.06 This ratio tells the need of bank to c
-0.01 -0.01 -0.03 -0.01 -0.03 Return on assets tells that how muc

0.01 0.01 0.01 0.01 0.01 This ratio states the power of earnin
1.77 1.81 1.79 1.81 1.72 The ratio helps to see the portion of
0.02 0.01 0.01 0.01 0.01 Since banks basic source of earning

0.02 0.02 0.02 0.02 0.02 Since banks basic source of earning
0.05 0.04 0.04 0.04 0.04 This ratio helps to find the total perc
0.04 0.03 0.03 0.03 0.03 This ratio helps to find the total perc
0.97 1.02 1.02 1.00 1.06 The ratio is helpful to understand th
5382.29 5189.60 5467.00 5279.00 5303.00 The total amount of income genera

0.19 0.10 0.12 0.14 0.11 This ratio tells how well the overhea

Data not found

Data not found
0.02 0.03 0.05 0.05 0.06 Credit risks are used by investors to
0.01 0.01 0.02 0.04 0.06 This ratio measures bank's financial
0.06 0.06 0.05 0.07 0.06 The Ratio has been increasing for p
0.21 0.17 0.12 0.12 0.08 The ratio indicates the total amount

0.04 0.05 0.09 0.02 0.13 This ratio explains the percentage o
0.59 0.57 0.53 0.53 0.47 It intreprets the banks total assets fi
Data not found
0.05 0.08 0.06 0.05 0.00 This ratio gives the indication about

0.19 0.25 0.29 0.25 0.16 NPA ratio indicates out of total loan

0.11 0.11 0.10 0.10 0.12 As a bank, it need to know the porti

2.45 2.72 2.89 2.91 3.25 This ratio gives an indication of the
 0.22 -0.01 0.27 0.37 -0.02 It shows the percentage of tax paid
-1.14 -1.27 -1.29 -1.28 -1.35

p of various ratios and after looking at the ratios the following points about IOB can be concluded:
meet their operating expenses.
ting a negative value.
o be done for the bank as soon as possible to be in a profitab;e position as well as to be in the game and compete with othe
 Analysis and commen

assets tells that how much the assets are efficient in genearting income. The ROA of IOB is almost constant but negative wh
y multiplier states the level of debt financed by a business. High ratio means more company is using a high amount of debt t
etary Ratio has been increasing for past 4 years, but there is slight decline in 2020. This ratio is the proportion of shareholde
ures the level that the company is able generate higher profits without as much need of capital. The higher the ratio the bett

states the total percentage of net profit generated from its total operations. The Higher the better as it states it is able to ge
utilization ratio indicates the capabilty of total assets to generate revenue. The higher the better. In our case, it is pretty muc
y multiplier states the level of debt financed by a business. High ratio means more company is using a high amount of debt t

ks basic source of earning is spread, the need to know earning power of assets to generate spread is very important. It is con
is indicator to show the health of the bank that how much operating profit is generated by utilizing its total assets. Since, it i
tells the need of bank to create total provisions of its total assets. The higher the bad as it blocks money and reduces efficein
assets tells that how much the assets are efficient in genearting income. The ROA of IOB is constant but negative which is n

states the power of earning assets to create the ability of the bank to create more spread. The higher the better. The spread
helps to see the portion of earning assets from total assets. It indicates the ability of bank to create wealth. Tha ratio has be
ks basic source of earning is spread, the need to know earning power of assets to generate spread is very important. It is con

ks basic source of earning is spread, the need to know earning power of assets to generate spread is very important. It is con
helps to find the total percentage of interent income earned because of earning assets. It is constant since last five years wh
helps to find the total percentage of interent expence out of total interest bearing liability. It is constant since last five years
s helpful to understand the total percentage of earning asset consumed in to settle interest bearning liabilites. The trend sho
amount of income generated because of lending at higher rate and depositing at lower rate is called spread. The more is goo

tells how well the overheads expenses are being take care of. The effeciency ratio under 50% is considered optimal. If it incre

s are used by investors to find out company's risk level and whether they should invest in the shares of this bank or not. An i
measures bank's financial stability by measuring it's capital and risk. The minimum capital to asset ratio is 8% under BASEL N
has been increasing for past 4 years, but there is slight decline in 2020. This ratio is the proportion of shareholders' equity t
ndicates the total amount internal liability to that of its total assets and rest portion is external liabilites. The ratio is not ver

explains the percentage of provision created of loans. The more the provisions indicated more chances of NPAs. The trend sh
ts the banks total assets financed by debt. If it is greater than 1, it indicates that a considerable portion of debt is funded by

gives the indication about the money which is kept aside to recover bad loans in the future. IOB's Reserve ratio has increased

indicates out of total loans granted, how many are now non performing. NPA ratio of the bank has improved over the years

it need to know the portion of money spend on its staff of total expenses as it is a service firm. The Operating efficiency rati

gives an indication of the extent to which “hot” money is being used to fund the riskiest assets of the bank.Volatile Liabilities
he percentage of tax paid by the banks. The less it is means more disposable income and better opportunities fornext year. S

me and compete with other profitable banks in the upcoming future.

 Analysis and comments

most constant but negative which is not a good sign as it shows the efficency is poor.
using a high amount of debt to finance its assets. A stable growth can be seen in this ratio by the bank which means the ban
the proportion of shareholders' equity to total assets, and as such provides a rough estimate of the amount of capitalizatio
l. The higher the ratio the better. The trend in our case shows negative figures therefore, we can say that the effeicency of th

tter as it states it is able to generate high profit because of low cost. Again in our case, the ratios are negative because the c
er. In our case, it is pretty much constant but not very high which is not a good sign.
using a high amount of debt to finance its assets. A stable growth can be seen in this ratio by the bank which means the ban

ead is very important. It is constant for all the years which is good and indicates that they are able to make 2% of their asset
zing its total assets. Since, it is negative for all the years, it is not a good sign.
ks money and reduces efficeincy. It is very unstable throughout the trend and very high for last year which can be very dange
stant but negative which is not a good sign as it shows the efficency is poor.

higher the better. The spread of IOB is only 1% of its earning assets therefore, we can say that ability of the bank is very low
eate wealth. Tha ratio has been decreasing from 2016 to 2020 but the Indian Overseas Bank still can be said to be using its
ead is very important. It is constant for all the years which is good and indicates that they are able to make 2% of their asset

ead is very important. It is constant for all the years which is good and indicates that they are able to make 2% of their asset
nstant since last five years which is not good as it means the bank is not making progress.
constant since last five years which is not good as it means the bank is not making progress.
arning liabilites. The trend shows that it is pretty high which is very bad situation for the bank as it simply indicates more an
called spread. The more is good. The trend shows that spread is very unstable but is not favourable for the bank which can le

considered optimal. If it increases, it means that either expenses are increasing or revenues are decreasing. The Effeciency r

hares of this bank or not. An ideal credit risk ratio is less than 35% and here in all the years it is less than that and hence, one
sset ratio is 8% under BASEL Norm and anything above it indicates that the capital is more than the minimum requirement f
tion of shareholders' equity to total assets, and as such provides a rough estimate of the amount of capitalization currently
l liabilites. The ratio is not very high which i=means the bank has more of debt as we above also. This is not very good for th

chances of NPAs. The trend show it not very high except for the year 2020 and 2018. This means the NPA could be higher in
e portion of debt is funded by assets. The trend shows that IOB bank's ratio is almost ranging from 0.45 to 0.6 which is consi

B's Reserve ratio has increased in the previous 4 years, but decreased in the last year, which was due to Bank's positivity rega

has improved over the years which implies that the bank was able to reduce their Bad Loans over the years.

. The Operating efficiency ratio is stable in the past 5 years, which implies that the bank is working efficiently.

of the bank.Volatile Liabilities have increased during the period of 5 years,which implies that the Bank's vulnerability is also
opportunities fornext year. Since the bank has been in the losses for last five years, it is not justifiable to analyze this ratio a
 e bank which means the bank has to use more debt to finance its assets.
of the amount of capitalization currently used to support a business.
n say that the effeicency of the bank is poor.

os are negative because the company is experiencing losses since past few years.

e bank which means the bank has to use more debt to finance its assets.

ble to make 2% of their assets utilized.

year which can be very dangerous for bank as it is already in losses.

ability of the bank is very low to generate income.

till can be said to be using its assets effeciently and has a passive income generation.
ble to make 2% of their assets utilized.

ble to make 2% of their assets utilized.

as it simply indicates more and more burden.

able for the bank which can lead the bank to shut as it is the basic income for the bank.

e decreasing. The Effeciency ratio has increased from 12.07% in 2016 to 17.38% in 2020. The ratio is much below 50% which

less than that and hence, one can think invest in IOB.
n the minimum requirement for daily transactions to take place, in IOB it is less which indicates that the bank does not have
nt of capitalization currently used to support a business.
o. This is not very good for the bank as it is already is great losses.

ns the NPA could be higher in these years which can again lead to more losses.
om 0.45 to 0.6 which is considerable.

s due to Bank's positivity regarding the decreased Bad Loans.

over the years.

king efficiently.

he Bank's vulnerability is also increasing to risk of bad loans as well as hot money is also increasing with the bank. The bank
stifiable to analyze this ratio as the amount of tax paid depends uponth profit and since it has incurred loss in all five years, t
atio is much below 50% which shows that the bank has been managing its overheads expenses properly and have increased

s that the bank does not have minimum money required to carry out it's operations.

sing with the bank. The bank should work towards making the ratio lower which will imply better management of funds.
ncurred loss in all five years, the tax amount is also very fluctuating.
 properly and have increased by 5 percent points over last 5 years.

tter management of funds.