The Hindu Business Line : Higher interest income lifts Bank of India net 78 pc

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Mumbai Jan. 22 Buoyed by a higher net interest income, Bank of India (BoI) has posted a 78 per cent growth in net profit to Rs 254.87 crore for the quarter ended December 31, 2006, against Rs 143.1 crore in the corresponding period the previous year.

Mr M. Balachandran, Chairman and Managing Director, BoI, said the bank was able to manage its net interest margin by containing the cost of deposits as well as their deployment in high-yielding advances.

"The bank focused on retail deposits in the Rs 15 lakh to less than Rs 1 crore category and not on bulk deposits. Our advances have been mainly to the SME, agriculture, retail and mid-sized corporate segment," he said.

Net interest income rose by 31 per cent to Rs 858.76 crore (Rs 656.68 crore) and the domestic net interest margin improved to 3.76 per cent from 3.55 per cent in December 2005.

Total income jumped by 28 per cent to Rs 2,641.01 crore in the fourth quarter, against Rs 2,063.09 crore in the previous year.

Total expenditure was higher by 23.6 per cent at Rs 2,087.85 crore (Rs 1,688.39 crore).

In the first nine months of the fiscal, deposits have grown by 21 per cent to Rs 1,06,612 crore (Rs 87,794 crore) while advances have recorded a year-on-year increase of 28 per cent to Rs 79,819 crore (Rs 62,299 crore).

No let-up in demand

Mr Balachandran said the growth of 30 per cent in domestic credit would be sustained in the next three months.

"Demand for credit continues unabated and will be sustained at 30 per cent in the next three months. However, it could slow down to 25 per cent in the medium-term," he said.

The cost of domestic deposits increased to 4.40 per cent against 4.10 per cent in the previous year, while the yield on domestic advances inched up to 9.20 per cent from 8.45 per cent.

acquisition

The Chairman said the bank was in the process of completing the acquisition of P T Bank Swadesi Tbk, a listed bank in Indonesia. BoI has acquired majority stake of 76 per cent in the Indonesian bank for $24 million.

The bank has four branches and four sub-offices and has a licence to deal in foreign exchange.

"Indonesia is a fast growing economy and the banking space has been recently opened up. We have had a representative office for 30 years and have been seeing good volume of business," Mr Balachandran said.

International operations account for 30 per cent of BoI's net profit and the Chairman said the RBI approval had been received to set up branches in Tanzania, Belgium, Canada, Dubai, South Africa and Vietnam.

BOI scrip on Monday ended at Rs 204.40 on the BSE against the previous close of Rs 203.35

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