The Hindu Business Line : Bank of India net surges 78% on core operations, NPA management

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Bank of India net surges 78% on core operations, NPA management

Beating the peers: Mr T.S. Narayanasami (left), Chairman & Managing Director, Bank of India, and Mr K.R. Kamath, Executive Director, at a press conference in Mumbai on Monday. - Paul Noronha

Our Bureau

Mumbai, July 28 While several public sector banks reported flat growth in profit and some even losses, Mumbai-based Bank of India’s net profit surged by 78 per cent to Rs 562 crore in the quarter ended June 30, 2008, against Rs 315 crore in the corresponding period last year.

The bank achieved this by focusing on core banking operations, prudent NPA management and keeping the investment portfolio to the minimum.

Net interest income grew 25 per cent, deposits grew 30 per cent and advances rose 39 per cent.

However, Bank of India, like its peers, also saw a depreciation of Rs 129 crore on its Government securities portfolio, in view of the rising interest rates and bond yields. But the bank was able to show profits by shifting Rs 2,200-crore worth Government securities to the Held to Maturity (HTM) portfolio from Allowed for Sale (AFS), at the beginning of year in April, said Mr T.S. Narayanasami, Chairman and Managing Director.

“Close to 88 per cent of our investment portfolio is in HTM. Therefore, the implication of interest rate rise on AFS has been kept to minimum. But the depreciation of Rs 129 crore was unavoidable.”

The profit of Rs 68 crore on sale of securities (Rs 65 crore), and recovery of Rs 87 crore (Rs 20 crore) from written off accounts added to the bank’s bottomline.

Net interest margin dipped slightly to 2.89 (2.96 per cent). The rising interest rates also pushed up cost of deposits to 5.51 per cent (4.93 per cent).

The shares of Bank of India closed at Rs 294.85, up 3.53 per cent from Rs 284.8 on the BSE, on Monday.