Bank of India sees 25% credit growth in FY11

Bank of India sees 25% credit growth in FY11

Mumbai: State-run Bank of India expects loans to grow 25% and deposits to rise 23%-24% in the year to March 2011, a top official said on Friday.

“Demand is expected from mid-corporates, retail, SMEs (small and medium businesses) and infrastructure," chairman and managing director Alok K Misra told a press conference.

The bank with a capital adequacy of 12.94%, and adequacy of 8.48% in the Tier-I segment, has a headroom to raise over Rs7000 crore in case of need to fund loan growth, he said.

Earlier, the bank posted a 47% fall in net profit for the March quarter to Rs428 crore on account of higher provisions.

Provisions during the quarter rose to Rs808 crore, up from Rs384 crore a year ago on account of slippages following economic downturn in FY10.

“Sectors like aviation, pharma, steel, IT and gems led to slippages," Misra said.

The bank with a provision coverage ratio of 65.51% as on 31 March, 2010, needs to set aside about Rs2800 crore to achieve Reserve Bank of India’s norm of 70% provision coverage ratio by September.

The lender sees stable interest rates in next 5-6 months with enough liquidity to fund credit demand, Misra said, adding the bank has sanctioned loans worth Rs29,000 crore that are yet to be disubursed.

Bank of India shares ended 5.6% down at Rs347.50 in the Mumbai market that ended down 1.29%.