Bank of India Q2FY25 results: Net profit rises 63% to Rs 2,374 crore

NIMs guidance of 2.9 per cent by March 2025

Bank of India (BoI) on Monday reported a 63 per cent year on year (Y-o-Y) jump in net profit to Rs 2,374 crore for the second quarter of the current financial year (Q2 FY25), backed by a 49 per cent rise in non-interest income, including treasury gains and recoveries.

 

Sequentially, the Mumbai-based lender’s net profit rose by 39.4 per cent from Rs 1,703 crore in June (Q1FY25). Its stock closed 0.63 per cent higher at Rs 112.25 per share on the BSE on Monday.

 

BoI's Net Interest Income (NII) expanded four per cent Y-o-Y to Rs 5,986 crore in Q2FY25 compared to Rs 5,740 crore in the same quarter a year ago. Net interest margin (NIM) declined to 2.82 per cent in Q2FY25 compared to 3.08 per cent in Q2FY24. Sequentially, NIM declined from 3.07 per cent in Q1FY25.

 

Referring to pressure on NII and margins, Rajneesh Karnatak, Managing Director & chief executive officer, BoI said the corporate loans worth Rs 20,000 crore got paid off in July and the credit growth happened mostly in August and September.

Now the disbursements have picked up which will enhance NII and margins. NIMs will rise to 2.9 per cent by the end of FY25, Karnatak said in a post-results virtual media interaction.

 

 The bank’s non-interest income was up by 49 per cent Y-o-Y to Rs 2,518 crore, of which, the gains from sale and revaluation of investments grew multifold Rs 730 crore in Q2FY25 from Rs 81 crore in Q2FY24. The recovery from written-off accounts grew 22 per cent Y-o-Y to Rs 685 crore, according to an analyst presentation.

 

The lender’s provisions for non-performing assets (NPAs) more than doubled to Rs 1,427 crore in Q2FY25 compared to Rs 678 crore in Q2FY24. The bank made Rs 200 crore provisions for one lumpy telecom public sector unit which became NPA.

 

Karnatak said the bank has Rs 1,000 crore exposure to this telecom PSU account and is in dialogue with management for resolution. It also front-loaded aging provisions for accounts that already had become NPA.

 

The asset quality profile improved with gross NPAs declining to 4.41 per cent in September 2024 from 5.84 per cent in September 2023. Net NPAs also declined from 1.54 per cent in September 2023 to 0.94 per cent in September 2024. The provision coverage ratio (PCR), including written-off accounts, improved to 92.22 per cent in September compared to 89.58 per cent a year ago.

 

Advances grew by 14.51 per cent Y-o-Y to 6.21 trillion in Q2FY25. Retail advances grew by 21.61 per cent Y-o-Y to Rs 1.21 trillion in September 2024. The bank expects the overall credit growth to be 14 per cent in FY25, backed by the pipeline of sanctioned credit of Rs 70,000 crore in corporate, Retail, Agriculture and MSME segment, Karnatak said.

 

Total deposits increased 10.15 per cent Y-o-Y to Rs 7.75 trillion. The share of low-cost deposits - current account and saving account (Casa) – in domestic business declined to 41.18 per cent in September 2024 from 43.13 per cent a year ago.

 

The bank has guided for a 13 per cent growth in deposits for FY25 and will also raise Rs 5,000 crore through infrastructure bonds to finance credit. 

The bank’s capital adequacy stood at 16.63 per cent, with common equity Tier-I at 13.52 per cent at the end of September 2024. The bank will raise debt capital of Rs 2,500 crore by issuing Tier-I bonds in the second half. There are no plans for raising equity capital, Karnatak added.