A healthy growth in net interest income and tax write-back helped Bank of India report a turnaround performance in the first quarter, recording a net profit of ₹95 crore against a huge net loss of ₹3,969 crore in the preceding quarter.
In the reporting quarter ended June 30, 2018, net profit was up 8 per cent year-on-year (y-o-y) compared to ₹88 crore in the year-ago quarter.
Net interest income (difference between interest earned and interest expended) rose 32 per cent y-o-y to ₹3,354 crore (₹2,533 crore in the year-ago quarter).
Non-interest income was down 48 per cent y-o-y to ₹830 crore (₹1,611 crore), mainly on account of a loss of ₹465 crore on sale of investments (against a profit of ₹648 crore in Q1 FY2018) and lower commission, exchange and brokerage (₹265 crore versus ₹316 crore).
In the reporting quarter, the public sector bank received a tax write-back of ₹790 crore against a tax expense of ₹46 crore in the year-ago quarter.
Fall in bad loans
Total reduction in bad loans due to recovery, upgradation and write-off rose 66 per cent at ₹8,305 crore (₹5,063 crore in the year-ago quarter). However, slippages jumped 65 per cent at ₹6,671 crore (₹4,037 crore).
“The recovery journey will continue in Q2 (July-September quarter) also. Our target is that recovery and upgradation should be more than slippages so that net slippage will be minimum. Recovery from all sources will be ₹17,000 crore in FY2019.
“If you see the numbers like cost reduction, (low-cost) CASA (current account, savings account) deposits going up, RAM (retail, agriculture and MSME) loans going up, low-yield assets coming down, high-yield assets going up, recovery from NCLT and write-back to P&L…Q2 will be much better than Q1,” said Dinabandhu Mohapatra, MD & CEO, BoI.
Mohapatra said the bank has identified assets aggregating ₹8,000 crore to be sold to asset reconstruction companies.
“We are quite hopeful that around ₹500 crore will be realised during Q2 (through monetisation of non-core assets). Let us see how it happens. We have some real estate, some shares and all those things,” said the BoI chief.
Gross non-performing assets (GNPAs) declined by ₹1,724 crore during the quarter to ₹60,604 crore as at June-end 2018.
GNPAs nudged up to 16.66 per cent of gross advances against 16.58 per cent in the preceding quarter.
Total deposits were down 5 per cent y-o-y at ₹5,14,604 crore. Domestic deposits and foreign deposits declined by 3.49 per cent per cent and 12.08 per cent, respectively.