Public sector lender Bank of India (BoI) on Wednesday reported a net profit of R806 crore for the June-ending quarter, down 16% on year-on-year (y-o-y) basis. The y-o-y fall is due to higher provisions of R893 crore, against R694.4 crore in the first quarter of last fiscal. BoI’s operating profit fell by 5.5 % y-o-y to R2,060 crore.
Asset quality worsened during the quarter, and gross non-performing assets (NPAs) increased to R12, 532.49 crore, a 33.1% increase y-o-y and 5.6% on sequential basis. Meanwhile, net NPAs stood at R8,041.56 crore and net NPAs, as a percentage of net advances, were up 14 basis points sequentially at 2.14%.
Though the bank’s total advances increased 25.37%, year-on-year, in the quarter under review and it saw a 28.5% y-o-y growth in corporate credit, yields were subdued since a fourth of the corporate book had been loaned to highly rated public sector companies who borrow at the base rate.
The net interest income (NII) of the bank increased 5.8% y-o-y to R2,686 crore, while the domestic net interest margin (NIM) fell 62 basis points (bps) to 2.45% y-o-y. Non-interest income stood at R1,024 crore, down 13.3% y-o-y. The bank gave a guidance of 3% on NIMs and a loan growth of 18-20% for FY15.
“Of the R3,777 crore of slippages, R900 crore were due to technical reasons and are likely to be upgraded; 60% of them in the third quarter. The major slippages are from the infrastructure, iron and steel (sectors), and from pharma to some extent,” VR Iyer, chairman and managing director of BoI, said.
The bank made a total recovery of R1,203 crore, of which R623 crore was from the loan book, R580 crore was sold to asset reconstruction companies (ARCs), and R1,034 crore worth of loans were upgraded. Slippages during the quarter were to the tune of R3,777 crore, and Bank of India’s restructured assets during the quarter were R1,631 crore. Global advances increased to R3,81,566 crore, registering a growth of 23.31% y-o-y and its global deposits grew 20.7% y-o-y to R5,00,875 crore.
We are confident of pick-up in credit offtake from Oct
After Bank of India reported a 16% year-on-year drop in net profit, chairman and managing director VR Iyer spoke to the media about the performance and future expectations. Excerpts:
What is your outlook on slippages?
Of the R3,700-crore slippages, R900 crore are due to technical reasons and may