Aided by a rise in fees, commissions and a fall in provisions for bad loans, public sector lender Bank of India (BOI) is back in black in the first quarter (Q1) ended June 2017.
The last it posted a quarterly profit was in the third quarter ended September 2016.
The Mumbai-headquartered bank posted a net profit
of Rs 88 crore in Q1, against a net loss
of Rs 741 crore in April-June 2016. It had also posted a net loss
of Rs 1,045 crore in January-March 2016.
Its net interest income
– the difference between interest
earned and expenses – declined in the reporting quarter to Rs 2,533 crore, from Rs 2,775 crore in Q1FY17, according to quarterly results filed with the BSE.
Its provisions for non-performing assets
(NPAs) were down to Rs 2,156 crore in Q1FY18, from Rs 2,452 crore in April-June 2016. The provision coverage ratio stood at 63.48% at the end of June 2017.
The gross NPAs
were down at Rs 51,019 crore (13.05%) at the end of June 2017, from Rs 51,874 crore (13.38%).
“Unless there are unpleasant surprises from outside, which are beyond our control – for example farm debt waivers by states – we will continue to do better on the NPA front,” said Dinabandhu Mohapatra, managing director and chief executive officer, BOI, adding, “We expect NPA to come down both in absolute and percentage terms.”
The bank showed an improvement in containing its slippages, or good loans turning bad. The slippages, in the quarter under consideration, were at Rs 4,037 crore, compared with Rs 6,915 crore in the March quarter and Rs 6,233 crore in the year-ago quarter. Sequentially, the bank shrank its large and mid-corporate loan books, as the management guided that the bank would be reducing its exposure in the stressed sectors.
The bank’s management said out of the 12 accounts named by the Reserve Bank of India for immediate resolution, BOI
has exposure to eight accounts, totalling Rs 8,200 crore. In most cases, the bank’s provisioning on these assets is at 60%, while it has also done 100% provisioning in some cases.
Mohapatra said he expects some positive development regrading consolidation of banks
in this year, even as no formal talks have been initiated yet by the government. The aim for the bank is to “focus on our strengths, so that partners get attracted to us.”
The bank plans to raise Rs 8,000 crore in FY18, exploring all avenues, including selling of non-core assets and raising equity capital, depending on market conditions, Mohapatra said.
The other income
comprising treasury revenues, fees and commissions rose 30.04% to Rs 1,610 crore, from Rs 1,238 crore.
The capital adequacy ratio (CAR) was at 12.38%, with additional tier I (AT1) of 9.02% at the end of Q1FY18. Its CAR was 12.10%, with AT1 of 9.01% at the end of June 2016. The bank plans to ask the government Rs 2,500 crore in capital.
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