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Bank of India Q2 Net Profit Up 26% at Rs 786 Crore

Mumbai: Despite a rise in bad loans, Bank of India on Monday reported a 26 per cent jump in net profit at Rs 786 crore for the quarter ended September 2014, boosted by a higher core income which rose 20 per cent.

The public sector bank had posted a net profit of Rs 621.77 crore for the corresponding quarter a year ago.

Core net interest income grew 20 per cent to Rs 3,031 crore from Rs 2,527 crore in the year-ago period as its advances grew 15 per cent during the quarter.

In spite of a rise in bad assets, which rose to 3.54 per cent, its provisions for the period came down 9 per cent to Rs 1,350 crore from Rs 1,481 crore as the bank had a write-back of Rs 40 crore on provisions made for depreciation on its investments.

The lender saw stress on its asset quality rising in the period with gross non-performing assets jumping to 3.54 per cent from 2.93 per cent, and net NPAs jumped to 2.32 per cent up from 1.85 a year ago.

"Though NPAs have grown, the pace of resolution of stressed assets during the quarter has also accelerated," chairperson and managing director V R Iyer told reporters here.

Fresh slippages in the quarter stood at Rs 2,971 crore and the bank sold Rs 106 crore of NPAs to asset reconstruction companies.

She said the bank is aiming at gross NPAs of under 3 per cent and net NPAs below 2 per cent this fiscal year but added, "These targets are bit ambitious and I see gross NPA at 3.15 per cent."

The bank domestically restructured Rs 1,358 crore assets in the reporting period and has a CDR pipeline of Rs 1,500 crore for the current quarter.

Domestic net interest margin improved to 2.73 per cent from 2.45 per cent, while global NIM improved to 2.31 per cent from 2.29 per cent.

"We are targeting a domestic NIM of 2.75 per cent and international at 1.5 per cent in this fiscal," Ms Iyer said. Brokerages lapped the numbers and gave a buy call on Bank of India stock.

"The bank reported results with net income growth of 26.4 per cent to Rs 786 crore, mainly on account of 19.9 per cent growth in NII and de-growth in provisions," Angel Broking's Vaibhav Agrawal said.

The bank's domestic deposits grew 21 per cent to Rs 3,88,377 crore from Rs 3,22,193 crore, while domestic advances grew 15 per cent to Rs 2,68,546 crore as against Rs 2,32,815 crore in the same period last year.

The bank is looking at a loan growth of 14-16 per cent in this fiscal year.

The bank raised Rs 2,500 crore additional Tier I capital in the quarter and is planning to raise $750 million through a medium-term note (MTN) issue in the quarter.

"We are in the initial stage of MTN. May be in a month's time we will raise it," general manager for international business R A Sankara Narayanan said, adding that the bank has a $5-billion MTN programme.

The bank has already raised $2.25 billion. It has sought Rs 1,500 crore from the government under its capital infusion plan.

It has established a subsidiary to start merchant banking services. It has already received approval from the Reserve Bank of India and is awaiting nod from the markets watchdog Sebi. The bank will infuse Rs 10 crore in its merchant banking services arm.

Shares in Bank of India, on Monday, ended at Rs 285.95 apiece on the BSE, up 0.19 per cent from the previous close.