The Hindu Business Line : BoI may take Dai-ichi as insurance partner

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First quarter net increased 21.5 per cent to touch Rs 208.73 cr on higher net interest income. Total income increased to Rs 2,331.7 crore; other income at Rs 310.65 crore.

Mumbai , July 26

Bank of India is looking to enter the life insurance business through a joint venture with Japan-based Dai-ichi Mutual Life Insurance Company and Andhra Bank.

The bank also plans to raise up to $330 million in foreign currency as hybrid capital through innovative perpetual debt instruments for Tier I and debt instruments for upper Tier II capital this fiscal.

Announcing the bank's financial results for the quarter ended June 30, 2006, Mr M. Balachandran, Chairman and Managing Director, said that it might raise home loan rates, after the Reserve Bank of India raised short-term interest rates.

"We have not raised home loans for some time now and it is one of the lowest in the industry. Our Asset Liability Committee will meet some time next week," he said.

However, the bank is not looking to increase its prime lending rate, but may raise deposit rates if competition demands it, Mr Balachandran said.

Q1 net profit up

Bank of India's net profit increased by 21.5 per cent for the first quarter to touch Rs 208.73 crore (Rs 171.74 crore) on higher net interest income (NII).

Total income increased to Rs 2,331.7 crore (Rs 1,858.9 crore). NII rose 37 per cent to touch Rs 764 crore (Rs 559 crore). Other income touched Rs 310.65 crore (Rs 294.36 crore).

Capital adequacy ratio

The capital adequacy ratio was 10.36 per cent (10.6 per cent). In order to maintain 11 per cent CAR this fiscal, the bank plans to raise $80 million hybrid Tier I capital and $250 million of upper Tier II capital in foreign currency.

It has already raised Rs 700 crore of upper Tier II capital through a domestic bond issue in the first quarter.

"This, along with the profit growth we are targeting this fiscal, will help us maintain CAR of 11 per cent," he said.

Overseas plans

Bank of India plans to open either a representative office or a branch in Doha where it has taken over management of an exchange office. It is also in the advanced stages of setting up a wholly owned subsidiary in Tanzania and is also looking to expand in Indonesia, Mr Balachandran said.

The bank's proportion of net NPAs to total assets fell to 1.43 per cent (2.59 per cent). Total advances increased by 21.56 per cent to Rs 69,814 crore (Rs 57,432 crore). Total deposits increased by 19 per cent to Rs 95,814 crore (Rs 80,492 crore).

For the financial year 2006-07, the bank is targeting a growth of 20 per cent in deposits and 25 per cent in credit.

Its shares ended at Rs 102.8 on the BSE, up 4.1 per cent, from the previous close of Rs 98.75.

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