Public sector lender Bank of India (BoI) on Thursday reported a third-quarter net loss of Rs 1,505.58 crore — the highest quarterly loss in at least over 18 years according to Capitaline data. This is the second consecutive quarterly loss reported by the bank after it reported a second-quarter net loss of Rs 1126.24 crore this financial year.
In the third quarter of FY15, BoI had reported a net profit of Rs 173.38 crore.
Provisions jumped nearly 128% to Rs 3,603.92 crore in the third quarter compared to the same period last year. BoI stated it has made additional provisions as part of the asset quality review (AQR) conducted by the Reserve Bank of India (RBI).
Under the AQR, the central bank has asked lenders to make additional provisions in the third and fourth quarters for certain accounts that have not yet defaulted but are believed to be stressed.
Bank of India pointed out in an exchange filing that during the quarter, it has changed its accounting policy of provisioning in respect of NPAs classified as doubtful (secured portion) — one years to three years, from 60% (accelerated provision) to 40% (minimum provision).
“Had the earlier accounting policy been followed, the provision for NPAs for the quarter/period would have been higher by Rs 1,789.59 crore with consequential increase in net loss for the quarter/period by Rs 1,170.25 crore,” the bank stated.
Gross non-performing assets (NPAs) as a percentage of gross advances rose by 511 basis points to 9.18% compared to the same period last year. On a sequential basis, GNPAs rose by 163 basis points.
Net NPAs as a percentage of net advances rose by 275 basis points on a year-on-year basis to 5.25% in the third quarter. On a sequential basis, net NPAs rose by 94 basis points.
Net interest income (NII)—the difference between interest earned and interest expended—fell by 2.59% to Rs 2,708.04 crore on a y-o-y basis. Other income also fell by 13.78% to Rs 1,047.27 crore in the third quarter. Total income dipped by 7.20% to Rs 11,086.95 crore.
Operating profit declined by 24.47% to Rs 1,408.97 crore compared to the same period last year.
The bank also said that its board has approved the capital plan for raising of up to 82 crore fresh equity shares, tier-1 and tier-2 capital by issue of bonds/preference shares for an amount of Rs 10,000 crore.
Shares of BoI closed at Rs 85.20 on the BSE.