The bank’s management said that 41% of its borrowers, accounting for 52% of the loan book, have availed of the loan moratorium.
Public sector lender Bank of India (BoI) on Monday reported a net profit of Rs 844 crore in the June quarter of FY21, up 248% year-on-year (y-o-y), owing to a 21% fall in provisions on a y-o-y basis to Rs 1,512 crore. Profit growth was supported by non-interest income, which rose 43% y-o-y to Rs 1,707 crore.
The bank’s management said that 41% of its borrowers, accounting for 52% of the loan book, have availed of the loan moratorium. In terms of number of accounts in each segment, agriculture had 26% of the book under moratorium, retail had 64%, micro, small and medium enterprises (MSMEs) had 75% and corporates had 37%.
AK Das, MD and CEO, BoI, said that one bright spot is that of the 47 lakh accounts under moratorium, 52% are regular with no overdues. “Thirty-eight percent (there is a) default on only one installment on interest. So in a way, 90% of these accounts where moratorium has been extended are on safe grounds,” he said, adding, “still, we have done stress testing under two-three different scenarios and accordingly done the provisioning. This Rs 1,034 crore (of Covid provisions) is a part of that so that in case there are any shocks in the future, our P&L will be able to take it in.”
Only 4% of the accounts have a default of more than two months and 6% have a default of just two months, Das said.
BoI’s provision coverage ratio (PCR) improved to 84.87% from 83.74% at the end of March. The lender holds additional provisions worth Rs 272 crore against four stressed accounts — Sintex Industries, Religare Finvest, Reliance Home Finance and Reliance Commercial Finance —where a viable resolution plan has not been implemented within 180 days of the review period, as per the Reserve Bank of India’s (RBI) June 7, 2019 circular.
Banks are moving to initiate insolvency proceedings against all four accounts, BoI said. “If you leave aside the NBFCs, for Sintex, an application has already been filed with the NCLT (National Company Law Tribunal) and it is awaiting admission. For the rest of the accounts, it is the considered view of the bankers that they should also be taken to NCLT. We have to make a reference to the RBI,” the management said.
BoI’s net interest income (NII) fell marginally y-o-y to Rs 3,481 crore. The bank’s net interest margin (NIM), a key measure of profitability, fell 42 basis points (bps) sequentially to 2.48%. It expects to inch closer to the 3% level for margins in Q2.
Advances as on June 30 were at Rs 4.15 lakh crore, up 10.5% on a y-o-y basis. Much of the growth in credit came from the government and guaranteed advances segment, which grew over 48% y-o-y. Retail, agriculture and MSME advances accounted for 47.5% of the domestic loan book at the end of June 2020. BoI expects a loan growth of 7% in FY21.
Deposits increased 16.2% y-o-y to Rs 5.95 lakh crore at the end of June 2020. The current account savings account (CASA) ratio stood at 40.6% at the end of Q1FY21, lower than 43.11% a year ago. BoI recognised slippages of Rs 402 crore during Q1FY21, recoveries worth Rs 546 crore and upgrades worth Rs 113 crore. Loans worth `3,505 crore were written off, up sharply from Rs 689 crore a year ago and Rs 1,638 crore a quarter ago. The lender showed an improvement on the asset quality front in Q1, with the gross non performing asset (NPA) ratio falling 87 bps sequentially to 13.91%. The net NPA ratio fell 30 bps to 3.58%.
The capital adequacy ratio of BoI as per Basel III, stood at 12.76% as on June 30, down from 14.35% a year ago, and its common equity tier-I (CET-I) ratio was at 9.46%, down from 11.14% a year ago. The bank is targeting a round of capital-raising in Q3, Das said.
BoI’s shares on the BSE ended 2.02% higher than their previous close at Rs 48.05 on Monday.