Bank of India has posted a drop of 38.5 per cent in net profit to Rs 301.1 crore for the quarter ended September, owing to a sharp rise in provisioning for bad loans and reversal of interest income. For the corresponding period of the previous financial year, the bank had reported a net profit of Rs 491crore.
On Monday, the bank stock fell 2.5 per cent to close at Rs 279.9 on the BSE.
While the lender’s total income rose to Rs 8,899 crore, compared with Rs 7,728 crore in the year-ago period, net interest income rose 15.34 per cent to Rs 2,196 crore, against Rs 1,903 crore in the corresponding period of 2011-12. Executive Director N Seshadri said interest income, which reflected earnings from core operations, had shown good growth. However, high provisions for non-performing assets (NPAs) , restructured assets and reversal of interest income booked for accounts that are now non-performing assets (NPAs) took a toll on the bank’s net profit.
Total provisions rose about 46.4 per cent to Rs 1,552 crore from Rs 1,064 crore in the year-ago period. Of the total provisions, those for NPAs stood at Rs 1,477 crore. The provision for the aviation account (Kingfisher Airlines) was also substantial. Gross NPAs rose to 3.42 per cent, against 3.02 per cent a year earlier. In absolute terms, gross NPAs stood at Rs 8,898 crore, compared with Rs 6,548 crore in the corresponding period last year. At the end of June, gross NPAs stood at Rs 6,751 crore. The provision coverage ratio of NPAs rose to 60.96 per cent from 59.1 per cent in the year-ago period
Chief Financial Officer Gauri Shankar said the economic slowdown had affected many companies, especially those in the textiles and metals sectors, adding these companies were facing hurdles in making payments.
Bank of India gave a cautious outlook for credit expansion. It expects its loan book to grow 16-17 per cent this financial year, owing to improvement in offtake during the second half.
The bank’s net interest margin for domestic business stood at 2.7 per cent. It expects this to improve to about 2.9 per cent by March, Seshadri said. The bank’s capital adequacy ratio (Basel II) was 11.20 per cent (tier I at 8.07 per cent), compared with 11.97 per cent (tier I at 8.26 per cent) in the corresponding period of the previous financial year.
