Public sector lender Bank of India’s net profit rose by 12% year-on-year to Rs 1,151 for the quarter ending December 31 despite a jump in its provisions.
The bank’s provisions increased by 461% to Rs 1,879 crore in Q3FY23. The increase in provisions is mainly on account of ageing assets and higher provisioning on standard assets.
The stock slumped to intraday low of Rs 89.65 per share on the earnings, to end at Rs 93.20, lower by 4.7% compared to its previous close on the National Stock Exchange (NSE).
The bank was required to make provisions of Rs 1,400 crore on standard assets as per the directions of the Reserve Bank of India (RBI), which the lender could spread over three quarters.
The bank did part of the provisioning in Q2FY23 and decided to do the rest of provisions in Q3FY23. The lender saw 74% y-o-y increase in pre-provisioning operating profit (PPOP) to Rs 3,652 crore even as its non-interest income dropped 22% to Rs 1,432 crore.
The robust loan growth led to a 64% y-o-y net interest income (NII) to Rs 5,596 crore. Global net interest margin (NIM) improved by 101 basis points (bps) y-o-y to 3.28% as of December 31 while domestic NIM expanded by 121 bps to 3.72%.
The bank’s domestic advances grew 11.6% to Rs 4.3 trillion led by retail and corporate segment. Total retail, agriculture and MSME (RAM) advances, which form 54% of total book, increased by 13% y-o-y to Rs 2.3 trillion. The bank’s overseas advances grew by 47% to Rs 81,128 crore.
Global deposit growth was muted at 4.9% to Rs 6.5 trillion, with current account, savings account (CASA) ratio was at 49 bps to 44.56% as of December 31. The cost of deposits stood at 3.72% in Q3FY23 higher by 18 bps sequentially.
On asset quality front, gross non-performing asset ratio (NPA) fell by 280 bps to 7.66% as of December 31 while net NPA ratio fell by 105 bps to 1.61%. Sequentially, gross NPA ratio declined 85 bps and net NPA ratio fell by 31 bps. The bank’s provision coverage ratio (PCR) stood at 90.27% as of December 31 against 88.96% a quarter ago. The NPAs are higher in metals, textiles and food processing segments. The bank is aiming for gross NPA at below 7% and net NPA below 1.5%, said Atanu Das, MD & CEO.
The bank’s total capital adequacy ratio as per Basel-III norms was at 15.60% as of December 31 as against 15.51% a quarter ago. The bank raised Rs 1,500 crore additional tier-1 capital in Q3FY23 and is yet to review the proposed share issue via qualified institutional placement (QIP).