Bank of India on Thursday reported a net profit of R586 crore, down 27% year-on-year (y-o-y) for the quarter ended December 2013. Profitability at the public sector lender was hit largely due to an increase in provisions during the quarter. Provisions at the bank increased sharply by 48% y-o-y to R1,558 crore. Net profit was R586 crore on account of higher provisioning. As per the RBI guidelines, we have taken restructured assets from the standard category to the sub-standard category and made much higher provisions, explained VR Iyer, CMD at Bank of India .

Net interest margins (NIMs) for the bank stood at 2.37%, up 2 bps from the preceding quarter. Domestic NIMs improved by 19 bps to 2.89%, while international margins were at 1.10%, down 24 bps. NIMs were boosted by net interest income, which was up 17.81% y-o-y to R2,719 crore while operating profit for the quarter stood at R2,144 crore, up 15.52% y-o-y.

We are expecting our domestic NIM to be around 3%, for the rest of the year, because we have only two more months for the current financial year to end, Iyer added.

Asset quality at the bank worsened and gross non-performing assets (NPAs) increased 16.21% y-o-y to R10,023 crore while net NPAs increased 12.68% y-o-y to R6,147 crore.