Bank of India net down 16.4 per cent to Rs 806 crore on lower treasury income

MUMBAI: Bank of India has reported a 16% year-on-year fall in its net profit for the quarter ended June at Rs 806 crore as higher provisions and lower other income dented its profit margins.

The state-owned bank’s net profit for the first quarter stood at 806 crore against Rs 964 crore a year earlier even as its net interest margin, or NIM, dropped 62 basis points on year to 2.45% for India operations. In the January-March quarter, the bank had reported 26% year-on-year dip in its net profit.

"Pressure on asset quality continues. Our NIM is down because we lent about 25% of our loans in the quarter to 'Navratna' companies," said V R Iyer, chairman and managing director at Bank of India.

Navratna is an official title given to nine state-owned companies. They get loans at base rates below which banks cannot lend.

Bank of India expanded its domestic loans by 25% to Rs 2.62 lakh crore where corporate credit expanded nearly five times higher than retail credit growth. Net interest income, or the difference between interest earned and paid out, was up by 6% to Rs 2,686 crore.

"In the last one year we have added almost a mini bank going by our lending exercise. This year, we would like to consolidate our gains," Iyer said.

During the three-month period, the bank’s provisions and contingencies shot up nearly 29% y-o-y to Rs 893 crore, while other income dropped 13% to Rs 102 crore.

The net non-performing assets, or bad loans, grew slightly to 2.14%, from 2.1% in the previous fiscal. Gross non-performing asset or bad loans ratio was at 3.28% as against 3.04% a year earlier.

Bank of India shares closed at Rs 280.95 on the Bombay Stock Exchange on Wednesday, down 0.86% from the previous close, while the broader index Bankex was up 1.57% to 17,421.39 points.