 "V R Iyer")
Weighed down by huge provisions for bad loans and a fall in net interest income (NII), government-owned Bank of India (BoI) had a net loss after 56 quarters, of Rs 56.1 crore for the March quarter, the fourth and final one (Q4) of 2014-15.
Its earlier net loss was for the March quarter of 2001, at Rs 30.2 crore. The Mumbai-based bank reported a net profit of Rs 557.5 crore in Q4 of 2013-14.
The net profit for all of FY15 dipped 37.4 per cent to Rs 1,709 crore from Rs 2,729 crore for FY14.
The board of directors has recommended a dividend of Rs 5 a share (of Rs 10 each).
After the results announcement, the BoI stock fell 6.1 per cent to Rs 191 in closing trade on the BSE exchange.
Vijayalakshmi R Iyer, chairperson and managing director, who retires this weekend, said the higher provisioning was done because “I did not want any problem for my successor. The cleaning-up process is almost over”.
NII in Q4 fell 6.5 per cent to Rs 2,847 crore from Rs 3,047 crore in January-March 2014. Other income — profits from sale on investment, exchange transactions and commissions — rose 22 per cent to Rs 1,122 crore from Rs 914 crore.
Reflecting the benefit from softening yield on bonds, its profit from sale of investments grew by 159 per cent to Rs 215 crore from Rs 83 crore a year earlier.
Deposits rose 11.5 per cent to Rs 531,907 crore and advances to Rs 411,726 crore at end-March. The net interest margin declined from 3.24 per cent for FY14 to 2.11 per cent for FY15.
Asset quality worsened, with gross non-performing assets (GNPAs) at 5.39 per cent of the total as compared to 3.15 per cent a year before. In absolute terms, GNPAs doubled to Rs 22,193 crore from Rs 11,869 crore in March 2014.
The provisioning for NPAs almost doubled to Rs 2,240 crore in Q4 from Rs 1,135 crore in the year-ago quarter. Yet, the provision coverage ratio deteriorated from 58.6 per cent in March 2014 to 52.4 per cent in March 2015. Net NPA also increased to 3.36 per cent from two per cent at the end of Q4 in FY14.
Restructured loans totalled Rs 28,235 crore, with Q4 seeing Rs 2,743 crore of these. Loans worth Rs 859 crore were sold to asset reconstruction companies in the quarter.
Iyer said some accounts showing irregular payments had been treated as NPAs. “This classification will act as a pressure on borrowers to make payments,” she added.
The capital adequacy (Basel-III rule) was 10.73 per cent, with tier-I capital at 8.17 per cent. The bank expects the government, the majority shareholder, to infuse equity in this financial year. BoI could not make it to the list of banks that got equity support from the government in 2014-15, as it had not met the efficiency criterion.
The bank is in the process of divesting stake in its life insurance venture, Star Union Dai-ichi, in which it will sell 18 per cent stake to Dai-ichi Life. At present, BoI holds 48 per cent stake. Post the transaction, BoI will have 30 per cent stake in the company, while foreign partner will have 44 per cent. Union Bank of India, the third partner in the joint venture, will have 26 per cent stake in the company.
