CARE downgrades Bank of India's Tier-II bonds

CARE Ratings has downgraded Bank of India’s Tier-II bonds from ‘AAA’ to ‘AA+’, citing deterioration in asset quality and a decline in profitability. The agency said the rating factored in the capital support and majority ownership of the central government, the lender’s operations and average capitalisation levels.

In June this year, the gross NPA ratio stood at 6.8 per cent, while the net NPA ratio was 4.11 per cent. The bank’s gross non-performing asset (NPA) ratio rose to 5.39 per cent in March this year from 3.15 per cent in March 2014. During the same period, the net NPA ratio rose from two per cent to 3.36 per cent.

As of March 31 this year, the bank had an asset size of Rs 6,15,013 crore, with a network of 4,892 branches and 6,771 automated teller machines.

As percentage of advances, standard restructured assets outstanding rose to 4.2 per cent in FY15 from 3.6 per cent in FY14. Standard restructured assets (domestic), as percentage of total advances, stood at 4.5 per cent. These rose to 4.5 per cent in June this year, CARE  said.

As of June 30 this year, the central government held 64.43 per cent stake in the public sector lender.

For FY15, the bank’s return on assets ratio stood at 0.29 per cent, against 0.53 per cent in FY14. According to Basel-III norms, the bank reported a capital adequacy ratio of 10.73 per cent (Tier I-8.17 per cent) as of March 31, this year, the ratings agency said.

For the quarter ended June this year, the bank reported a profit after tax of Rs 130 crore on total income of Rs 11,659 crore, against profit after tax of Rs 806 crore on total income of Rs 11,329 crore in the quarter ended June last year.