Bank of India back in black in Q1
Mumbai:Bank of India said it swung to a profit in the June quarter from a loss in the year-ago period as it set aside less money to cover bad loans and other income jumped.
Net profit for the quarter stood at Rs87.71 crore from a loss of Rs741 crore a year ago. Ten analysts polled by Bloomberg had forecast a loss of Rs83.90 crore.
Provisions and contingencies declined 19% to Rs2,245.28 crore from Rs2,770.19 crore in the same quarter last year. It fell 53% from Rs4,736.21 crore in the preceding March quarter. Other income surged 30% from a year ago to Rs1,610.96 crore.
As a percentage of total loans, gross non-performing assets (NPAs) fell to 13.05% as compared to 13.22% in the preceding quarter and 13.38% in the year-ago quarter. Net NPAs declined to 6.7% in the June quarter compared to 6.9% in the previous quarter and 7.78% in the same quarter last year.
Gross NPAs declined 1.7% to Rs51,019 crore at the end of the June quarter from Rs51,875 crore in the same quarter last year.
Bank of India has exposure to 10 of the 12 accounts that are referred to National Company Law Tribunal for insolvency proceedings following the Reserve Bank of India (RBI)’s directive. The bank has provided 60% against the total exposure of Rs8,200 crore, said Dinabandhu Mohapatra, managing director and chief executive officer of the bank.
That apart, the bank’s exposure of over Rs3,900 crore to 26 accounts is also referred to NCLT, he added.
“Provisioning of around 40-50% should generally be sufficient in most cases given the secured nature of lending by some banks. Provisioning for more than 50% at this stage on the accounts identified by the RBI for resolution under insolvency and bankruptcy code would reduce the burden of any drastic provisioning in future,” said Karthik Srinivasan, senior vice-president, group head-financial sector ratings at Icra Ltd.
Net interest income (NII), or the core income a bank earns by giving loans, decreased 8.7% to Rs2,533.03 crore from Rs2,775.17 crore last year.
Advances for the quarter were mostly unchanged at Rs3.91 trillion from a year ago. Deposits rose 9.2% to Rs5.44 trillion.
The bank’s capital adequacy ratio stood at 12.38% on 30 June. The bank has sought a fund infusion from the government which will help the lender to boost its capital base.
“We are seeking Rs2,500 crore from the government,” Mohapatra said.
He also said that the bank aims to raise Rs8,000 crore through the sale of non-core assets as well through share sale.
BOI has initiated the process of selling its stake in STCI Finance Ltd, a non-banking financial company that is majority-owned by government institutions, as part of its plan to offload non-core assets. It is aiming to raise Rs626 crore through selling its 29.96% stake.
On Wednesday, the stock closed at Rs158.45 on BSE, up 3.77% from its previous close, while the benchmark Sensex fell 0.68% to 31,797.84 points.