Bank of India Q2 profit down 57 per cent at Rs323 crore

31 Oct 2009

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Bank of India has reported a 57 per cent fall in its fiscal second quarter (July-September 2009-10) net profit at Rs323 crore against the Rs672 crore it had achieved last year. BoI attributes this to large provisioning for bad loans and flat interest margins.

The gross non-performing assets (NPA) of the bank jumped to Rs3,920 crore from Rs1,978 crore a year ago taking net NPA to Rs1,604 crore from Rs608 crore in the comparable period last year. In fact, in the second quarter itself, the bank's slippage was Rs1,413 crore, including Rs700 crore that was restructured in the first quarter - this called for a provisioning of Rs470 crore as against Rs80 crore a year ago. This has affected the bank's profit badly.

The bank has been able to maintain operating profit at Rs1,205 crore (Rs1,214 crore) on a total income that rose 12 per cent to Rs5,164 crore. Chairman and managing director Alok Misra said the bank had adequately provided for bad loans and the bank would be able to curtail gross NPA to Rs2,500 crore by the end of the year.
 
Despite additional provisioning, the bank's provision coverage ratio continued to remain at 59 per cent as against RBI's stipulation of 70 per cent by 2010. The bank would need to provide additional Rs400 crore over the next four quarters to improve its coverage. Gross NPAs accounted for 2.6 per cent of the gross advances at end-September '09 as compared to 1.9 per cent in the previous quarter. The total restructured asset of Bank of India was Rs8,538 crore.

The bank's core non-interest income slumped 23.5 per cent y-o-y basis to Rs339 crore. Treasury profit rose seven-fold to Rs151 crore in September 09 against 18 per cent in the corresponding period. This along with interest income from investment which rose 33 per cent to Rs1,077 crore contributed to the profit earned. Net interest income largely remained flat at Rs1,409 crore against Rs1,363 crore a year ago.

Incremental credit was up 3.8 per cent in the first half of the year with the bank deciding to lower its credit target from to 18 per cent from 21-22 per cent.

The banks said it had not seen a significant demand in credit even as it sanctioned Rs26,000 crore. On a year on year basis, bank's deposits rose 21 per cent to Rs198,715 crore while advances increased 16 per cent to Rs150,238 crore.

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