Bank of India Q2 drops as provisioning shoots up by 79%

Tuesday, 30 October 2012 02:16 administrator
MUMBAI: Bank of India (BoI) reported 38.5 per cent dip in profit to Rs 302 crore in the second quarter as provisions for bad loans jumped a massive 79 per cent. 

Net profit of the public sector bank stood at Rs 491 crore in the same period last fiscal. 

Total income rose 15.2 per cent to Rs 8,899.55 crore in the quarter ended September 30. 

"Due to rise in provisions on the back of stress seen in the mid-corporate segment, there was impact on our net profit," Bank of India Executive Director N Seshadri told reporters here. 

The bank's net interest income (NII) grew 15.3 per cent to Rs 2,196 crore in Q2 from Rs 1,904 crore in the same period last fiscal. Net interest margin was at 2.42 per cent for the quarter down a tad from 2.43 per cent in the same period last fiscal. 

The bank saw a massive rise in non-performing asset during the reporting period. While gross NPA rose to 3.42 per cent from 3.02 per cent in the same period last fiscal, net NPA rose to 2.04 per cent from 1.98 per cent a year ago. 

According to the bank, total slippages stood at Rs 2,400 crore and the provisions rose by 79 per cent to Rs 1,477 crore during this period over a year ago. 

"Due to stress on the mid-corporate accounts, the bank has seen higher slippages. But, we believe the business models of these companies remain strong, which will see turnaround in the coming quarters," Seshadri said. 

The bank said it restructured around Rs 810 crore in the quarter and the pipeline is not strong. "We don't see many accounts coming for restructuring in the coming quarters. However, certain sectors like metal and metal products, and textiles may face pressure," Seshadri admitted. 

The bank's advances grew around 20 per cent to Rs 2,60,379 crore in Q2, deposits grew 11.2 per cent to Rs 3,32,695 crore. "We expect a credit growth of 17-18 per cent and 15-16 per cent in deposit front in the current fiscal." 

The bank's capital adequacy ratio stood 11.10 per cent. During the first half of FY13, BoI's net profit rose to 17.9 per cent to Rs 1,189 crore from Rs 1,009 crore, while total income rose 16 per cent to Rs 17,449.58 crore.