BoI net loss soars to Rs 3,567 cr as bad loans bite

State-run Bank of India today joined its peers to report deeper losses at Rs 3,587 crore in the quarter to March as provisions for bad loans more than doubled to Rs 5,470 crore.
The bank had reported a net loss of Rs 56 crore in the same quarter last year.
"Losses in the quarter was on account of higher provisions made for NPAs, for accounts under asset quality review, pension liabilities, Uday scheme and the Punjab food grain case," the bank's Managing Director and Chief Executive Melwyn Rego told reporters.
The bank's total provisions more than doubled to Rs 5,470 crore in the March quarter from Rs 2,256 crore a year ago as its gross NPAs more than doubled to 13.07 per cent from 5.39 per cent, while net NPA too more than doubled to 7.79 per cent from 3.36 per cent.

In absolute terms, net NPAs stood at Rs 27,776.40 crore as against Rs 13,517.57 crore.
Rego said the bank made a provision of Rs 100 crore with respect to certain NPA accounts sold to asset reconstruction companies during 2014-15, but the provision was deferred to FY16.

The bank provided Rs 353 crore towards pension liabilities and Rs 1,829 crore for accounts under asset quality review in the quarter. It also made a provision of Rs 298 crore on account of Uday scheme and Punjab foodgrain issue.
"The total impact of the above factors, which are non recurring in nature, is Rs 2,580 crore out of a total loss of Rs 3,587 crore," Rego said.

Fresh slippages stood at Rs 13,500 crore during the quarter and for the full year they rose to Rs 27,500 crore.
The bank recorded a combined recovery and upgradation of
Rs 3,043 crore during the quarter and he said it has set a target of Rs 17,500 crore in recoveries and upgradations in FY17.
"The bank is cautiously optimistic about improved performance in the current year," he said.
Rego said the bank would raise around Rs 2,000 crore in tier II and in AT1 it would look at anywhere between Rs 2,000-3,000 crore.
"We would also be looking at equity of around Rs 5,000 crore. Overall, we would be looking at Rs 8,500 crore capital this year," he said.

The bank has identified some non-core assets to sell and would be looking at raising Rs 1,000 crore from them.
The bank reported a 7 per cent y-o-y decline in gross advances to Rs 3.82 trillion but expects a growth of 8-10 per cent in advances this year.
Rego denied reports of it being merged with some stronger peers.
A few days back there were media reports that government might look at merging Bank of India, UCO Bank and Indian Overseas Bank with some of the stronger players.
Domestic net interest margins stood at 2.43 per cent for the quarter as against 2.27 per cent, pulling down its total income to Rs 11,384.91 crore from Rs 12,286.98 crore year ago.

Thus, as per Reserve Bank's asset quality review guidelines, BoI more than doubled its provisioning for bad loans and contingencies to Rs 5,470.36 crore during the quarter, from Rs 2,255.49 crore.
NPAs of over 10 per cent may prompt RBI to initiate "prompt corrective action" to improve internal processes to deal with bad loans.
For the entire fiscal 2015-16, the bank posted a net loss of Rs 6,089 crore as against a profit of Rs 1,708.92 crore in the previous fiscal.
Last week, Punjab National Bank reported a record quarterly loss by any public sector lender at Rs 5,367 crore for the fourth quarter ended March 31, 2016.

Before this, several banks, including Bank of Baroda, Syndicate Bank, UCO Bank and Allahabad Bank, reported quarterly losses due to bad loans pressure.