Public sector lender Bank of India on Tuesday posted a 22% year-on-year (y-o-y) decline in its net profit at Rs 561 crore for three months ended June 30 — on account of a decrease in its operating profit and due to a skewed growth in its foreign advances, which fetch lower margin, compared to domestic advances, said Atanu Kumar Das, managing director and chief executive officer of the bank.
The lender’s pre-provisioning operating profit (PPOP) fell 22% y-o-y to Rs 2,183 crore in Q1FY23. Overall, the bank’s gross advances increased by 15% y-o-y to Rs 4.8 trillion. Net interest income (NII) grew 29% y-o-y to Rs 4,072 crore for Q1FY23.
The net interest margin (NIM) improved by 39 basis points (bps) y-o-y to 2.55% as of June 30 with domestic NIM improving to 2.88% while overseas NIM contracting to 0.98% during the period. The bank is aiming to improve its NIM to 2.75% with domestic NIM to 3% in FY23. The bank also reported a significant decline of 50% in its NII to Rs 1,152 crore due to trading losses.
The bank reported a decline of 421 bps y-o-y and a 68 bps sequential fall in its gross non-performing asset (NPA) ratio to 9.30% as of June 30. The net NPA ratio fell 114 bps y-o-y and 13 bps sequentially to 2.21% during the period. The bank made provisions of Rs 1,322 crore, down 20% y-o-y. The provision coverage ratio (PCR) stood at 87.96% as of June 30 against 86.17% in the previous year. The lender is planning to bring down the gross NPA ratio to 8% in FY23.
On a sequential basis, fresh slippages increased to Rs 2,465 crore while total reductions in NPAs, which include recovery, write-offs and upgrades, stood at Rs 4,024 crore.
The bank’s capital adequacy ratio stood at 15.61% as of June 30 against 15.07% the year ago with tier-I capital at 13.27%. The bank in April approved raising Rs 2,500 crore through an equity issue to increase its minimum public shareholding to 25% from 18.59% as of June 30. The bank will initiate the process for the fundraising after September, the bank management said. Bank of India’s global deposits increased 2.78% y-o-y to Rs 6.4 trillion in Q1FY23, of which domestic deposits were at Rs 5.5 trillion, lower by 1.1% y-o-y.