State-owned Bank of India expects advances to grow by 10-12 per cent in the current fiscal year with corporate loans yet to pick-up, top official said in an analysts call.
The bank’s year-to-date (YTD) loan growth stood at about 5 per cent mainly driven by Retail sector advances, Agricultural and MSME loans (RAM).
“Advances growth guidance will be in the range of 10 to 12 per cent for the full year. So far up to June, we had YTD growth of about 5 per cent, but that is mostly on the back of good RAM growth. Corporate is yet to pick up. We believe that from this quarter onwards, there could be some movement in the corporate book,” A K Das, Managing Director & Chief Executive Officer (MD&CEO), told analysts in post Q1FY23 earnings conference call.
The bank’s gross advances (global and domestic) stood at Rs 4,77,746 crore at end-June 2022.
In the first quarter ended in June of the current fiscal year, the lender registered a decline of 22 per cent in net profit at Rs 561 crore as against Rs 720 crore in the year-ago quarter.
Exuding confidence that it won’t be difficult to achieve the loan growth target for 2022-23, Das said the bank expects Net Interest Margin (NIM) of 2.90 per cent domestically and global NIM of 2.75 per cent.
In Q1FY23, bank’s domestic and global NIMs stood at 2.88 per cent and 2.55 per cent, respectively.
Das said a lot of repricing in loan book is happening in both sides and it would be good if the bank could maintain the guidances on its NIMs. In terms of asset quality, the bank said it has set a target of Rs 2,500 crore reduction in bad loans every quarter.
Of this, Rs 1,700 crore will come from upgradation and cash recoveries and the rest will be through various OTS (One Time Settlement) programmes which the lender has lined-up already, M Karthikeyan, Executive Director, said.
“We are sure that during this year, about Rs 3,000 crore will come through resolutions through NCLT, that’s what our guidance is,” he added.
At end of June 2022, bank’s gross Non-Performing Assets (NPAs) improved to 9.30 per cent of the gross advances, translating to Rs 44,415 crore. It was at 13.51 per cent (Rs 56,042 crore) by end of June 2021.
Likewise, the net NPAs fell to 2.21 per cent (Rs 9,775 crore) as against 3.35 per cent (Rs 12,424 crore).
Fresh slippages during the quarter were lower at Rs 2,465 crore as against year ago’s Rs 3,528 crore.
For the full year, Bank of India expects slippages not to cross Rs 8,000 crore. Besides, there were cash recoveries of Rs 1,219 crore, upgradation of Rs 465 crore and write-off of Rs 2,340 crore, leading to total reduction of Rs 4,024 crore in June quarter.