 "BoI March quarter net loss at Rs 3,587 cr as bad loans rise")
It had announced net loss of Rs 1,505 crore in third quarter ended December 31, 2015, and Rs 1,126 crore in the second quarter ended September 30, 2015.
For 2015-16, its net loss was Rs 6,089 crore against net profit of Rs 1,708 crore in FY15, BoI said in a statement after the markets closed on Tuesday.
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The provisions and contingencies, mostly for non-performing assets (NPAs), rose to Rs 5,470 crore in the fourth quarter of FY16 from Rs 2,255 crore in the corresponding quarter of FY15. The provision coverage ratio for bad loans stood at 51.14 per cent at the end of FY16.
The bank’s gross NPA as a percentage of bad loans rose to 13.07 per cent in the fourth quarter, compared with 5.39 per cent in the year-ago period. In absolute term, gross NPA stood at Rs 49,879 crore at the end of March 2016 from Rs 22,193 crore at end of March 2015. About Rs 10,000 crore of NPAs were on account of the Reserve Bank of India (RBI)’s asset quality review (AQR), said Melwyn Rego, managing director and chief executive officer of the bank. The bank has completed its AQR exercise and asset quality stress would be less in the coming quarters, Rego said at the bank’s results conference.
“The bank expects to face asset quality pressure but the magnitude would be far less than what we witnessed,” Rego said, adding, he was “cautiously optimistic about an improved performance”.
The bank will strive to recover and upgrade more accounts than what slips into bad debt, the executive said. Recovery and upgradation in the whole year was Rs 10,921 crore, from Rs 3,483 crore in FY15. The bank will aim to recover Rs 17,500 crore of loans in the present financial year.
In order to reduce concentration risk and efficiently use the capital available, the bank is also cutting down on its exposure to the corporate sector in an aggressive manner. Corporate loans now constitute 51 per cent of the bank’s total loans, down from 56 per cent a year ago. In the next one year, the bank aims to reduce the share further to 45 per cent, while the rest 55 per cent will come from retail. The bank is also cutting down on its international exposure, particularly in the buyers’ credit portfolio. “We are reducing our exposure from wherever we have faced problems. We have pared our infrastructure sector exposure by about Rs 5,000 crore,” Rego said. Total corporate exposure has fallen by about Rs 26,500 crore in a year, the bank said.
Apart from the gross NPA, the bank has standard restructured assets of about two per cent of its loans. The bank has a watch list of Rs 11,000 crore. In the fourth quarter, about Rs 13,500 crore of good loans of the bank turned NPA.
The net NPA, portion of bad loans yet to be provided for, stood at Rs 27,996 crore (7.79 per cent) at the end of March 2016 up from Rs 13,517 crore (3.36 per cent) a year ago. The bank’s global net interest margin remained flat at 2.11 per cent.
According to the management, the bank will sell its non-core assets, including stake in its subsidiaries, with a target to raise Rs 1,000 crore.
The BoI scrip closed flat at Rs 80 per share on the BSE on Tuesday.