Latest News | BoI Q1 Net Profit Rises to Rs 844 Cr as Asset Quality Improves

Mumbai, Aug 3 (PTI) State-run Bank of India (BoI) on Monday reported a 247 per cent jump in net profit to Rs 844 crore in the quarter ended June, on lower provisions and improvement in asset quality.

The bank had posted a net profit of Rs 243 crore in the year-ago period, while it had registered a net loss of Rs 3,571 crore in the fourth quarter of previous fiscal.

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"The first quarter had a lot of positives for the bank. On the business front, we were positive, though mostly on account of deposit accretion," the bank's managing director and CEO A K Das told reporters.

"Our key ratios -- return on assets, credit costs and cost efficiency exhibited significant improvement," he added.

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Net interest income (NII) stood at Rs 3,481 crore in April-June as against Rs 3,485 crore in the corresponding quarter a year ago.

Net interest margin (NIM) (global) stood at 2.48 per cent in June 2020 as against 2.67 per cent in June 2019.

NIM (domestic) stood at 2.73 per cent as against 3.03 per cent in June 2019.

"NII was flat on account of muted loan growth and a lower interest regime that we had passed on to the customers. Accordingly, our NIM also declined," Das said.

Gross non-performing loans (NPAs) improved to 13.91 per cent from 16.50 per cent a year ago, while net NPAs stood at 3.58 per cent as against 5.79 per cent.

Provision coverage ratio improved to 84.87 per cent.

Total provisions before tax dipped to Rs 1,512 crore during the period under review from Rs 1,911 crore in the same quarter of previous fiscal.

The bank has extended moratorium on loan repayments to 41 per cent of its borrowers. In value terms, it stands at about 52 per cent.

During the June quarter, the lender made an additional provision of Rs 620.30 crore for stressed accounts wherein moratorium due to COVID-19 pandemic was extended, taking total provisions to Rs 1,034.78 crore as on June 30, 2020.

"We have done stress testing under two-three different scenarios and we have accordingly provided Rs 1,034 crore so that if there is any shock in the future, we will be able to handle it," Das said.

As of June 30, the bank held additional provision of Rs 271.72 crore in respect of four borrower accounts, where viable resolution plan has not been implemented within 180 days of review period.

The four accounts are Syntex Industries, Reliance Commercial, Reliance Home Finance and Religare Finvest.

Slippages in June quarter stood at Rs 402 crore as against Rs 3,683 crore a year ago.

Das said that as per the stress test, slippages may be of Rs 3,200 crore in a mild scenario and about Rs 5,000 crore in a moderate scenario.

The bank's recovery stood at Rs 546 crore during the quarter. In the second quarter, it expects recoveries of Rs 2,500 crore, including Rs 2,100 crore of cash recovery and upgradation.

The bank has also identified a few accounts worth Rs 700-800 crore for sale to asset reconstruction companies (ARCs), Das said.

On capital requirement, he said the bank is adequately capitalised at present with some amount of growth capital. He expects a credit growth of 7 per cent for this fiscal.

"We will require capital from the third quarter onwards. It may be in the range of Rs 7,000-8,000 crore. For that we would be approaching our board," Das said, adding that capital raising will be done either through QIP or through additional tier 1 bonds.

Domestic advances increased 10.96 per cent year-on-year (YoY) to Rs 3,59,715 crore in the quarter under review, while deposits rose 21.19 per cent YoY to Rs 5,17,577 crore.

The bank's scrip on Monday closed 2.02 per cent higher at Rs 48.05 apiece on the BSE.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)