Public sector lender Bank of India (BoI) on Tuesday reported a net loss of R3,587 crore in the March quarter of FY16, compared with a loss of R56.14 crore in the same period last year. The loss widened as provisions more than doubled on a year-on-year basis to R5,470 crore.
Gross NPA of the bank stood 13.07% in the quarter under review, against 5.39% in the same quarter last year. Net NPA increased to 7.79%.
Speaking to reporters, MD & CEO Melwyn Rego said the bank is cautiously optimistic of a better performance in FY17. “The bank’s performance is set to improve in FY17,” he said, adding that the bank has set itself a target of R17,500 crore in recoveries and upgrade in FY17. In FY16, its recoveries and upgrade stood at R10,921 crore.
“The bank expects to face asset quality challenges though in a much comparatively lower magnitude during the next two-three quarters,” Rego said.
According to Rego, the quantum of recovery and upgrade has been targeted to at least match any fresh slippage in asset quality during FY17. “With the expected growth in advances, this is likely to result in a lower NPA percentage by the end of March 2017,” he explained.
In Q4 FY16, BoI provided R353 crore in pension provisions, R1,829 crore for the Reserve Bank of India’s asset quality review and R298 crore in the UDAY scheme and Punjab foodgrain issue.
Net interest income (NII) — the difference between interest earned and interest expended — rose 12% year-on-year to R2,846 crore. Net interest margin (NIM) – a key profitability ratio – stood at 2.43% in Q4 FY16, up 20 basis points (bps) on a sequential basis.
Its non-interest income dropped 21% to R884 crore in the March quarter.
In FY16, BoI reported a 7% Y-o-Y decline in gross advances to R3.82 lakh crore and the management attributed it to greater focus on bad loan management than credit growth.
The bank, Rego said, expects to grow its loan book by 8-10% in FY17. The lender would raise around R2,000 crore in tier II, and in AT1, it would look at anywhere between R2,000 crore and R3,000 crore.
“We would also be looking at equity of around R5,000 crore. Overall, we would be looking at R8,500 crore,” he said.
During the quarter, BoI revalued all premises forming parts of its fixed assets and the surplus of Rs 2,901 crore, arising out of the revaluation, was credited to revaluation reserves, reckoned for CET I capital.
“We are also expecting Rs 1,000 crore from sale of non-core assets,” Rego said, without divulging details of the assets that have been identified for divestment.