Bank of India net profit doubles to Rs 1,072 crore in September quarter

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November 02, 2021 5:16 PM

The gross non-performing assets ratio improved to 12 per cent as against 13.79 per cent in the year-ago period and 13.51 per cent three months ago in June.

bank of indiaThe blended net interest margin was also down to 2.42 per cent as compared with 2.66 per cent in the year-ago period. (File)

State-owned Bank of India on Tuesday reported doubling of its consolidated net profit to Rs 1,072 crore for the September 2021 quarter, driven mainly by lower provisioning and growth in non-interest income.

The net profit had stood at Rs 525 crore in the corresponding quarter last year.

The city-based lender’s core net interest income declined 14.32 per cent to Rs 3,523 crore as the advances growth was a tepid 2.7 per cent on sluggish corporate loans.

The blended net interest margin was also down to 2.42 per cent as compared with 2.66 per cent in the year-ago period.

The other or non-interest income jumped 59 per cent to Rs 2,320 crore for the reporting quarter on the back of improvements across all income lines.

Its Chief Executive and Managing Director A K Das said the bank is targeting the overall credit growth number to come at 6-7 per cent for FY22, looking at the pipeline of the loans that it has, and the margins to improve up to 2.70 per cent.

The gross non-performing assets ratio improved to 12 per cent as against 13.79 per cent in the year-ago period and 13.51 per cent three months ago in June. Das said it is targeting to reduce the gross NPA ratio further to 10 per cent by March 2022.

The bank, which witnessed slippages of over Rs 1,300 crore in the September 2021 quarter, expects the fresh additions to come down to Rs 1,000 crore in each of the two remaining quarters.

It expects better at Rs 9,500 crore in the second half of the fiscal on the recovery and upgrades, which will be a mix of recoveries from various forums including NCLT and also upgrades including through the sale of assets to asset reconstruction companies.

It has direct exposure of Rs 1,025 crore for the entities linked to the SREI Group, while another Rs 970 crore is pooled assets that have been used for on-lending by the troubled non-banking financial company (NBFC). The direct exposure is an NPA and the bank has enhanced provision on the same to 50 per cent during the quarter, he said.

As a result of lower NPAs, its overall provisions were reduced to Rs 897 crore as against 2,047 crore in the year-ago period, helped largely by a massive fall in the money set aside for bad and doubtful assets.

Das acknowledged that operating profit is still down at Rs 2,678 crore as compared with Rs 2,831 crore in the year-ago period because of the core interest income, and added that the same will improve as the NII (net interest income) improves with loan growth.

He said that in a hardening of yields scenario, the treasury income is also a concern for the bank and hence, it is not expecting higher treasury gains going ahead.

He added that the benchmark 10-year bond yield will stabilise at 6.45 per cent going ahead, limiting the ability to book profits from the sale of investments that contribute significantly to the other income in the reporting quarter.

The bank’s overall capital adequacy improved to 17.05 per cent on the back of infusion exercises carried out recently.

The bank scrip gained 3.48 per cent to close at Rs 62.50 apiece on the BSE on Tuesday, compared with a correction of 0.18 per cent on the benchmark.

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