Indian Overseas Bank

The Board of Directors have pleasure in presenting the Annual Report together with the Audited Balance Sheet and Profit & Loss of the Bank for the year ended 31^st March 2024.

Global and Domestic Economic Environment

The global economy has remained resilient with a stable outlook as reflected in various high frequency indicators despite significant central Bank interest rate hikes to restore price stability and continuing geopolitical conflicts. With easing of inflationary pressures, economic activity grew steadily, defying warnings of stagflation and global recession, Risks to the global outlook are now broadly balanced compared with last year.

Taking into consideration these prevailing global economic conditions, the International Monetary Fund (IMF) predicts the global economy will grow at 3.2 percent during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies, where growth is expected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025, will be offset by a modest slowdown in emerging market and developing economies from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025.

The Indian economy remained resilient on account of strong economic fundamentals, buoyant domestic demand, robust balance sheets of the corporate sector and strong Bank credit demand which was also facilitated by a large increase in capex by the centre.

India's real gross domestic product (GDP) increased by 7.8% in the fourth quarter (Q4) of 2023-24. Manufacturing sector is the main driver behind this growth. The manufacturing sector grew by 8.9% during the quarter and witnessed a significant growth of 9.9 % in full financial year 2023-24. The real gross domestic product (GDP) expanded by 8.2 % for the full financial year ended 2023-24, the third successive year of 7 per cent or higher growth on the back of buoyant domestic demand. The real GDP expanded by 9.8 per cent and 7.0 per cent in 2021- 22 and 2022-23, respectively.

The Reserve Bank of India has projected real GDP growth of India for 2024-25 at 7.0 per cent with Q1:2024-25 at 7.1 per cent; Q2 at 6.9 per cent; Q3 at 7.0 per cent; and Q4 at 7.0 per cent, with risks evenly balanced.

The International Monetary Fund (IMF) has revised its forecast for India's economy, by 30 basis points to 6.8% growth in FY25 citing buoyant domestic demand compared with 6.5% estimated in January 2024.

Financial Performance

The Bank has continued its remarkable performance in Business as well as from a profitability front during the financial year ended 2023-24. The Bank has crossed the Rs.5 lakh crore mark in total business for the first time in the year that ended on March 31,2024. The Gross Advances increased by 15.9% (YoY) to Rs.2,19,018 crore and the total Deposits increased by 9.6% (YoY to Rs.2,85,905 crore as on 31.03.2024.

Despite various challenges in mobilisation of low-cost CASA deposit, the Bank was able to increase CASA Deposit by 10% to Rs.1,25,508 Crore as on 31.03.2024 as against Rs.1,14,113 Cr in the previous financial year ended2022- 23 by onboarding more than 24.5 lakh CASA customers. CASA Ratio of the Bank also improved by 16 bps to 43.90% as on 31.03.2024 from 43.74% as on 31.03.2023.

The Net Interest income of the Bank has increased by 19.07% to Rs.9,829 Crore as on 31.03.2024 on the back of strong credit growth from Rs.8,255 Crore reported in the previous financial year.

The Net profit of the Bank has increased by 26.54% to Rs.2,656 Crore in the financial year ended 2023-24 from Rs.2,099 Crore as on 31.03.2023 on the back of strong growth in Net Interest Income and Improvement in asset quality. The Net Interest Margin (NIM) of the Bank for the full financial year has been improved by 35 bps to 3.28% as of March 2024 as against 2.93% as of March 2023.

On the asset quality side, the Bank has seen decrease in both gross NPA & Net NPA. The Gross NPA of the Bank decreased to Rs.6,794 Crore (3.10%) as on 31.03.2024 from Rs.14,072 Crore (7.44%) reported in the previous financial year ended 31.03.2023. Similarly, the Net NPA of the Bank has decreased to Rs.1,217 Crore (0.57%) from Rs.3,266 Crore (1.83%) for the above said period.

On a full year basis, the slippage decreased to Rs.1,516 Crore in the financial year 2023-24 from Rs.4,029 Crore in the previous financial year 2022-23. The slippage ratio of the Bank for the full financial year has been reduced by 200 bps to Rs.0.87% in March 2024 as against 2.87% as of March 2023. The Bank has reported a recovery of Rs.4,549 Crore in the financial year 2023-24 which is 6.2% growth against the recovery of Rs.4,285 Crore in the previous financial year 2022-23.

The provision requirement for NPA has decreased by 5.32% to Rs.2,706 Crore as on 31.03.2024 as against Rs.2,858 Crore reported in the previous year due to improvement in the asset quality. The credit cost of the bank for full year basis has reduced to 1.34 % as on 31.03.2024 as against 1.70 % reported in the last year. The Provision Coverage Ratio (PCR) of the Bank has improved by 422 bps to 96.85 % as on 31.3.2024 from 92.63% as on 31.03.2023. The Capital Adequacy ratio has improved to 17.28% as on 31.03.2024 as against 16.10% as on 31.03.2023 and is well above the regulatory requirement.

Income and Expenditure Analysis

The Interest received on advances has increased by 33.65% (YoY) to Rs.17,576 Crores as on 31^st March 2024 in comparison to Rs.13,151 Crores received over previous year. Interest on investments has increased to Rs.5,946 Crores in FY 2023-24 as against Rs.5,849 Crores in FY 2022-23. Overall interest income has improved substantially by 23.96% to Rs.24,050 Crores in FY 2023-24 as against Rs.19,401 Crores in FY 2022-23.

The Interest on Deposits stood at Rs.12,609 Crores in FY 2023-24 as compared to Rs.10,536 Crores paid in previous year. Interest on Borrowings have increased to Rs.1,611 Crores in FY 2023-24 as against Rs.609 Crores in FY 2022-23. Overall Interest Expenses has increased to Rs.14,220 Crores in FY 2023-24 as against Rs.11,145 Crores in FY 2022-23.

Net interest income has improved by 19.05% from Rs.8,256 Crores in FY 2022-23 to Rs.9,829 Crores in FY 2023-24.

The operating income has increased by 25.24% to Rs.15,485 Crore as against Rs.12,364 Crore reported in the previous financial year ended 2022-23. The Operating expenses have increased to Rs.8,722 Crores in FY 2023-24 as against Rs.6,422 Crores in FY 2022-23. The employee wage revision payment due to 12^th Bi-partite settlement/9^th joint note was the major reason for increase in operating expenses in FY 2022-23.

Corporate Governance

Corporate Governance reflects the built-in value system of the Bank in conducting its day-to-day affairs. The Bank recognizes the critical importance of effective Corporate Governance for the safe and sound functioning of the Bank and lays emphasis on ensuring that structures, processes, and systems are put in place to establish strategic objectives to serve the interest of the Bank and its stakeholders which also facilitate effective monitoring.

SEBI (Listing Obligations and Disclosure Requirements Regulations), 2015 (LODR)

As per SEBI (LODR),

> The Bank is providing a remote e-voting facility to its shareholders, in Annual General Meetings/ Extraordinary General Meetings.

> The Code of Conduct is applicable to all members of the Board and the Senior Management (i.e., General Managers of the Bank).

> The Bank is submitting a quarterly compliance report on Corporate Governance to the Audit Committee of the Board and to BSE & NSE, where the shares of the Bank are listed.

> The Bank is also submitting Quarterly Investor Grievance Report to BSE & NSE.

Investor Education & Protection Fund (IEPF)

> As per the guidelines of Ministry of Corporate Affairs (MCA), Government of India, the Bank has transferred Unpaid Dividend amount up to the year 2013-14 to IEPF.

> Bank is complying with all guidelines/regulations laid down by the Regulatory Authorities and Government of India from time to time. The Bank redresses the shareholders grievances without any delay.

Capital Adequacy Ratio

The Capital Adequacy ratio of the Bank improved further to 17.28 % as on 31.03.2024 as against 16.10 % as on 31.03.2023 which is well above the regulatory requirement.

Branch Network

The Bank has 3,236 Domestic Branches as on 31^st March 2024 as against 3,220 Branches as on 31^st March 2023, comprising of 910 Rural Branches (28.12%), 967 Semi Urban Branches (29.89%), 659 Urban Branches (20.36%) and 700 Metropolitan Branches (21.63%). The Bank also has 49 Regional Offices, 2 Extension Counters, 1 Satellite Office, 2 City Back Offices, 6 Nodal Audit Offices and 1 Retail Loan Processing Centre. During the year FY 2023-24, the Bank has opened 4 Rural Branches, 7 Semi-Urban Branches, 3 Urban Branches, 2 Metropolitan Branches and 1 Retail Loan Processing Centre.

BOARD OF DIRECTORS

The business of the Bank is vested with the Board of Directors. The MD & CEO and EDs function under the superintendence, direction, and control of the Board. The strength as on 31.03.2024 is ten directors comprising three whole time Directors, two non-executive Directors, four Part-time Non-Official Directors and one director elected from amongst the shareholders to duly represent their interest.

Position of the terms of the Directors during the Financial Year 2023-24:

*Until Further Orders

During the FY 2023-24, the following Director's tenure ended as below:

Acknowledgement

The Board of Directors are grateful for the valuable guidance and support received from the Government of India, Reserve Bank of India, Securities and Exchange Board of India (SEBI), Stock Exchanges, State Governments, Financial Institutions, and all Overseas Regulators. The Board of Directors acknowledge with thanks the valued Customers, Employees Union, Officers Association, domestic and international Banking group, the shareholders & other stakeholders for their valued support and continued patronage with the Bank.

The Board also wishes to place on record its profound appreciation for the valuable contribution of the Bank's Staff at all levels and looks forward to their continued involvement with commitment towards achieving the future goals.