BoI profit up 51%

BANKING SCORECARD

The improvement in pricing of credit and recoveries from non-performing assets helped Bank of India to post 51 per cent growth in first quarter net profit at Rs 315 crore as against Rs 209 crore a year earlier.

Total income in the first quarter ended June 2007 rose to Rs 3,180.41 crore from Rs 2,331.7 crore in the same quarter a year ago. Interest income was up by 39.11 per cent to Rs 2,728 crore and interest expenses rose by 48.11 per cent to Rs 1,780 crore, resulting in net interest income of Rs 948 crore.

The yield on advances, reflecting a hike in prime lending rate, rose to 9.41 per cent from 8.15 per cent a year ago.

"Better pricing of advances and recoveries from NPAs helped to improve bottom line," chairman and managing director T S Narayanasami said. Advances grew by 27.6 per cent to Rs 87,121 crore.

The public sector bank has decided to go slow on retail advances, which constitute 26 per cent of loan book, owing to concern of defaults especially for home loans and higher provisioning for standard assets.

The deposits rose by 27.7 per cent to Rs 1,22,358 crore. The share of income low cost deposits dipped to 38.5 per cent from 40 per cent a year ago. The cost of deposits rose to 4.93 per cent 4.32 per cent.

Narayanasami said interest rates are softening and bank would look at cutting rates for deposits with maturity up to a year. It would review rates on July 31, a day when the Reserve Bank of India would review monetary policy. If the trend of drop in yields in securities continues, the banking sector can think about reducing the prime lending rate.

The gross NPA declined to 2.29 per cent from 3.61 per cent. The net NPAs were down to 0.69 per cent from 1.49 per cent, while the capital adequacy ratio stood at 11.51 per cent against 11.36 a year ago.