BoI net profit zooms 90% Y-o-Y to Rs 1,027 cr on back of lower provisions

Retail loans grew at the fastest pace of 16% on year to Rs 75,542 crore as on December 31.

BoI net profit zooms 90% Y-o-Y to Rs 1,027 cr on back of lower provisions
Bank of India

Bank of India (BoI) on Friday reported a 90% year-on-year rise in its net profit to Rs 1,027 crore for the October-December quarter, on the back of lower provisions. On a sequential basis, the bank’s net profit was lower 2.3%. The net interest margin (NIM) stood at 2.27% for the quarter, lower than 2.42% as on September 30 and 2.58% during the corresponding period a year ago.

The state-owned bank’s total loan book stood at Rs 4.37 lakh crore as on December 31, of which domestic advances stood at Rs 3.82 lakh crore, up 5.3% on year. Retail loans grew at the fastest pace of 16% on year to Rs 75,542 crore as on December 31, while loans to micro, small and medium enterprises (MSMEs) grew 8.9% on year to Rs 67,400 crore, and agriculture loans grew 12.4% on year to Rs 64,439 crore. Advances to corporates and others, however, declined 4% on year to Rs 1.25 lakh crore. The bank is targeting 7-8% of on-year advances growth for the current fiscal year, managing director and chief executive officer Atanu kumar Das said in a post-earnings call on Friday.

“We find at the end of December quarter and subsequently in the month of January there is much better traction in the RAM (retail, agriculture and MSME) segments. The corporate segment has grown, but again the required traction is still awaited…we are hoping by Q1 (April-June) of next financial year, things (credit growth) should be more or less normal,” Das said.

On the liabilities side, the bank’s domestic deposits increased 1.7% on year to Rs 5.45 lakh crore as on December 31. Low-cost current account and savings account accounted for 44.1% of the lender’s domestic deposit book. Owing to lower growth in advances, the bank’s net interest income — difference between interest earned and expended — stood at Rs 3,408 crore in the reporting quarter, lower than Rs 3,739 crore a year ago and down 3.3% on a sequential basis.

Global net interest margin (NIM) stood at 2.27%, lower than 2.42% a quarter ago. Global NIM will likely improve back to 2.4% by March- end, Das said. He said while there were factors — like asset classification standstill last year, recent volatility in bond yields and other one-off events that have caused a fall in the bank’s income — the lender was progressing towards higher NII growth by increasing the advances growth rate compared to previous quarters and by shoring up the credit-deposit ratio.

Further, Bank of India’s asset quality improved in the reporting quarter with gross and net non-performing asset (NPA) ratio falling to 10.46% and 2.66%, respectively, as on December 31, from 13.25% and 2.46% a year ago, respectively. The lender’s slippage ratio, however, increased to 0.47% in the reporting quarter from 0.36% a quarter ago. By March-end, Bank of India is aiming to lower its gross NPA ratio to 9.5% and net NPA to around 2.25%, Das said. Total provisions stood at 335 crore in the reporting quarter, sharply lower than894 crore a quarter ago and Rs 1,810 crore a year ago.

The bank has identified six NPAs with Rs 3,000 crore outstanding that will be transferred to the National Asset Reconstruction Company (NARCL), the management said. The lender has also made 47% provision on Future Retail’s account with an exposure of Rs 1,078 crore. As on December-end, Bank of India’s capital adequacy ratio stood at 16.66%, of which tier-I capital stood at 13.60% and tier-II capital was 3.06%.

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First published on: 05-02-2022 at 01:00 IST