Indian Overseas Bank - Quarterly/Annual Result Disclosures and Notes dated 31 Dec 2018

Auditor and Management Disclosures and Notes for the quarterly results dated 31 Dec 2018

1. The above financial results have been reviewed by the Audit Committee of the Board and approved by the Board of Directors in the meeting held on January 25, 2019. The results have been subjected to limited review by the Statutory Central Auditors of the Bank in line with the guidelines issued by the Reserve Bank of India and as per the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

2. The above financial results have been prepared following the same accounting policies and practices as those followed in the Annual Financial Statements for the year ended March 31, 2018, except the treatment of MTM Losses as stated in Note No. 5.

3. The working results for the Quarter ended December 31, 2018 have been arrived at after considering provision for NPAs, Standard Assets, Unhedged Foreign Currency Exposure, Depreciation on Investments & Non - Performing Investments, as per RBI guidelines. Provision for taxes (after adjustment for Deferred Taxes), Provision for Contingencies, Employee Benefits, Depreciation on Fixed Assets and other usual and necessary provisions.

4. In accordance with RBI circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015, banks are required to make Quarterly Pillar 3 disclosures including Leverage Ratio and Liquidity Coverage Ratio under Basel III Framework. The disclosures are being made available on bank website at the following link The disclosures are not subjected to verification by the Statutory Central Auditors of the Bank.

5. RBI vide its Circular DBR.No.BP.BC.113/21.04.048/2017-18 dated June 15, 2018 granted an option to spread mark to market loss on AFS & HFT investments for quarter ended June 30, 2018, equally over the four quarters commencing with the quarter in which the loss is incurred. The Bank has availed the option to spread provisioning over four quarters, and accordingly charged Rs. 146.50 Crore to the profit and loss account for the quarter ended December 31, 2018 and the unamortised depreciation amount as on December31, 2018 is Rs.146.50 crores.

6. Based on the available financial statements and the declaration from borrowers, the Bank has estimated the liability towards Unhedged Foreign Currency Exposure to their constituents in terms of RBI circular DBOD.NO.BP.BC.85/21.06.200/2013-14 dated January 15,2014 and holds a provision of Rs. 11.08 crores as on December 31, 2018.

7. The Bank has on July 23, 2018 received infusion to the tune of Rs. 2157 crore from Government of India towards contribution of the Central Government in the preferential allotment of equity shares (Special Securities/Bonds) of the bank, as Government's investment. Based on the permission received from Reserve Bank of India vide letter dated July 30, 2018, the Bank had considered the same for the purpose of CET1 capital for quarter ended 30.09.2018. After obtaining shareholders approval in Extraordinary General Meeting held on 02.11.2018, the Bank has allotted 1373010821 equity shares at Rs.15.71 each (i.e. face value of Rs.10.00 and premium of Rs.5.71) to Government of India on 12.11.2018.

8. During the quarter ended December 31, 2018, the Bank has successfully raised Basel III Compliant Tier II Bonds Series II to the tune of Rs.300 crores.

9. The Management in relation to System Migration has implemented action plan including System Audit to address significant areas. Reconciliation of certain Inter Branch Transactions are being addressed and the Management does not anticipate any material impact emanating out of such exercise on the financial statements of the Bank.

10. During the previous quarter based on latest actuarial valuation relating to gratuity, the Bank has reworked the present value of obligation for the financial year 2018-19, and excess contribution of Rs.69 crores was credited to the Profit and Loss account. In view of the above no provision towards gratuity has been made during the quarter under review.

11. The Provision Coverage Ratio of the Bank as on December 31, 2018 stood at 64.23 %.

12. Previous period/year figures have been regrouped /reclassified/rearranged wherever necessary.

Ajay Kumar Srivastava
Executive Director

K Swaminathan
Executive Director

R Subramaniakumar
Managing Director & CEO