Bank of India (BoI) is planning to reduce the Centre's stake in the bank to 51 per cent from the present 76 per cent during the current financial year. It will, in the process, pay around Rs 150 crore to the government.
"We will move the government in a few days in this regard as we are now in a sound position as far as financial health is concerned," K V Krishnamurthy, chairman and managing director.
He added that BoI will negotiate with the government on the issue of returning the capital preferably at par.
More From This Section
This move will improve its earnings per share substantially though the capital adequacy ratio will come down to 11 per cent from 12.23 per cent at present.
The bank is also in the process of closing down wholly owned subsidiary, BoI Finance, while its mutual fund will not undertake any new business.
The bank will either close down the mutual fund, which runs 3 open-ended schemes and has a corpus of Rs 30 crore or sell it off.
During the financial year, it picked housing loans amounting to Rs 40 crore. Of its 2534 branches, around 100 have been identified as loss-making while about 40 are unviable. BoI plans to merge about 10 branches this year, the same as last year.
Meanwhile, the bank has posted a healthy 45.75 per cent growth in net profit at Rs 252 crore in financial year ended March 31, 2001 as against Rs 172.81 crore posted last year.
This level of profitability comes despite the bank absorbing extra-ordinary VRS expenses of Rs 330 crore and making full provision of Rs 134.46 crore for probable losses arising out of the pay-order crisis.
The bank's Board has declared a 15 per cent dividend for 2000-01 as against 10 per cent last year.
Excluding the VRS expenses the net profit amounts to Rs 582 crore, a growth of 236.79 per cent while the operating profit is up by 61 per cent to Rs 1,102 crore.
Interest earned by the bank in 2000-01 was up by 12.24 per cent to Rs 5316.87 crore (Rs 4736.99 crore in 1999-2000) while the interest expended rose by 6.38 per cent to Rs 3663.03 crore (Rs 3443.14 crore). It recorded an other income of Rs 861.91 crore (Rs 785.54 crore). Operating expenses rose by 25 per cent to Rs 1743.73 crore (Rs 1396.40 crore).
K V Krishnamurthy, chairman and managing director said despite the VRS the staff expenses still amounted to 17 per cent of the total expenses.
But the bank is poised to make a saving of Rs 170 crore a year on account of 7,768 crore employees opting for VRS.
Global deposits of BoI rose by 8.24 per cent to Rs 51,679 crore. Domestic deposits, which are included in the global deposits, saw a 11.31 per cent rise to Rs 42,883 crore (Rs 38,526 crore).
Global advances were up by 21 per cent to Rs 31,823 crore. Domestic advances were up by 17.34 per cent to Rs 23,660 crore.
The net non-performing assets (NPAs), after effecting a recovery of Rs 1038 crore in 2000-01, came down to 6.7 per cent as on March 31, 2001 as against 8.6 per cent as on March 31, 2000.
BoI has contained slippages at Rs 911 crore in the reporting fiscal as compared to Rs 1304 crore in 1999-2000.
Gross NPAs came down to 10.30 per cent as on March 31, 2001 as against 12.9 per cent as on March 31, 2000.
The capital adequacy ratio of the bank has improved to 12.23 per cent as on March 31, 2001 from 10.57 per cent as on March 31, 2000.