State-run Bank of India (BoI) today reported a massive 70 per cent dip in its net profit at Rs 173 crore in the quarter to December, from Rs 586 crore a year ago, driven down by a spike in bad loans and the resultant higher provisioning.
"Our performance in the current quarter has shown stress on asset quality. We have been making higher provisions of 40 per cent on doubtful assets as against 25 per cent required by the regulator," chairperson and managing director Vijaylaxmi Iyer told reporters here today.
The bank also increased provision for wages in the quarter. "We have been providing 11 per cent and now in Q3 we have provided for 13 per cent retrospectively from November 2012 onwards, pulling down so that is the hit we taken," Iyer said.
The market hammered the BoI counter with the stock falling around 6 per cent to close at Rs 227.65 on the BSE, whose main gauge Sensex rose close to 1 per cent.
The bank's total provision increased to Rs 1,692 crore in the period from Rs 1,558 crore.
"On the asset quality front, we are continuing to face pressure. This is because of the prolonged slowdown which has affected credit growth as well revenues of corporates," Iyer said.
The gross non-performing assets rose to 4.07 per cent as against 2.81 per cent last year same period. Net NPAs stood at 2.50 per cent as against 1.75 per cent. Provision coverage ratio of the bank stood at 56.62 per cent.
Iyer expects the GNPAs level to be contained below 4 per cent and NNPAs below 2.30 per cent this fiscal and is also hopeful of asset quality pressure easing in the second half of the next financial year.
The bank saw Rs 3,356 crore worth of fresh loans becoming NPAs in the period.
