Public sector lender Bank of India on Friday reported a 62% year-on-year rise in its net profit for the quarter ended December at Rs 1,870 crore. The net profit was lower than Bloomberg estimate of Rs 2,183 crore.
The bank’s net interest income (NII), or difference between interest earned and expended, moderated 2% y-o-y to Rs 5,463 crore during Q3. Net interest margin (NIM), meanwhile, moderated to 2.85% from 3.08% in Q2.
“The delta at which cost of deposit is increasing quarter-on-quarter (q-o-q) is much higher than delta we are getting on yield on advances, that is the reason for pressure on NII,” said Rajneesh Karnatak, MD & CEO at Bank of India. Going ahead,pressure on NIM due to deposit rush by banks will continue, but Bank of India will aim to maintain NIM around 3%, he added.
Further, the bank’s advances rose 11% y-o-y to Rs 5.65 trillion as on December 31. Retail, agriculture and micro, small and medium enterprises (MSME) loans formed 55% of the lender’s loan book and grew 14% y-o-y, whereas corporate loans grew 9% y-o-y to Rs 2.12 trillion.
Deposits, meanwhile, rose 8% y-o-y to Rs 7.07 trillion, of which low-cost current account and savings account (CASA) ratio stood at 43.88%. Bulk deposits accounted for nearly 12% of the bank’s deposit base while retail term deposits accounted for the rest. The bank is unlikely to raise deposit rates going ahead and expects the Reserve Bank of India (RBI) to cut repo rate in the first quarter of next financial year, Karnatak said.
Bank of India’s asset quality improved further, with gross and net non-performing asset (GNPA, NNPA) ratio moderating to 5.35% and 1.41% as on December 31 from 5.84% and 1.54% a quarter ago, respectively. The bank aims to lower GNPA to 5.10% and net NPA to 1.30% by end of March, the MD said.
During Q3, the bank raised Rs 4,500 crore by way of qualified institutional placement (QIP) and its capital adequacy ratio stood at 16.06% as on December end.