Bank of India net profit down 15% on higher expenses and provisions
Premium- Bank of India's operating expenses rose 15.8% and provisions were up 4.3%
- Net interest income stood at ₹3,145 crore, down 9.7% from the same period last year
Mumbai: Public sector lender Bank of India (BoI) on Tuesday reported a net profit of ₹720 crore in the three months to June, down 14.6% year-on-year (y-o-y) owing to higher expenses and provisions.
While the bank’s operating expenses rose 15.8% y-o-y to ₹2,715 crore, its total provisions were up 4.3% y-o-y to ₹2,086 crore. Its net interest income (NII) or the difference between interest earned and expended, stood at ₹3,145 crore, down 9.7% from the same period last year. The bank’s domestic net interest margin (NIM), a key indicator of profitability, was down 38 basis points (bps) y-o-y but was up by 19 bps on a sequential basis.
“The NIM will inch up further as the year progresses, and we will pair up advances and deposit growth. Last year was an aberration. So, we expect that going forward, this issue will be addressed also through higher accretion in our current and savings account (CASA) deposits," said A. K. Das, chief executive, Bank of India.
The bank witnessed an improvement in asset quality as gross non-performing assets (NPAs) as a percentage of total loans declined 40 bps y-o-y and 26 bps sequentially to 13.51% as on 30 June. Loans worth ₹3,942 crore slipped into NPA category in the June quarter, lower than ₹7,368 crore in the March quarter. These also include slippages in overseas loans. Among the categories, small businesses contributed the most to fresh NPAs in the quarter, at ₹1,615 crore.
That said, special mention accounts (SMA-2) loans or where repayments are delayed between 61-90 days rose to ₹4,879 crore as on 30 June, from ₹4,207 crore as on 31 March.
Bank of India reported 1.65% y-o-y rise in domestic advances to ₹3.65 trillion in Q1 FY22, while local deposits rose 6.7% y-o-y to ₹5.52 trillion in the same period.
“We expect a business growth of 6-7% in the current year with reorientation in liability and asset structure. Along with this, better collection and recovery mechanism will enable us to improve our NIM to about 2.5%," said Das.
On Tuesday, its shares on BSE closed at ₹74.55, up 0.47% from its previous close.
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