Bank of India reported a sharp 70 per cent drop in net profit for the October-December quarter at ₹173 crore. The profit declined largely due to surge in bad loans leading to higher provisions and lower non-interest income.

Net interest income grew marginally at ₹2,780 crore, while non-interest income dipped 8 per cent to ₹1,080 crore. Gross non-performing assets worsened to 4.07 per cent as on December-end 2014 compared with 2.81 per cent a year ago.

Provisions (including towards bad loans and employee wages) increased 9 per cent at ₹1,692 crore. VR Iyer, Chairperson and Managing Director, Bank of India, said, “Profits suffered due to the risk aversion caused by deterioration in asset quality and slow credit growth…“With macro economic improvement, we expect a modest recovery in growth in the second half of next fiscal.”

Of the ₹3,356-crore slippages during the quarter, the bank made recoveries worth ₹441 crore and assets aggregating about ₹450 crore were upgraded in January.

“Our focus has been to diversify as a retail bank. Corporate book has already reduced to 56 per cent of the total loan book from 58 per cent last year.

The bank’s restructuring pipeline for the fourth quarter is about ₹1,000 crore. “For the full year, loan growth will be 10-11 per cent, largely from the international side and less from domestic growth… “The current quarter will continue to remain challenging,” Iyer said.

Capital infusion

Iyer also expressed displeasure at the Government’s decision to exclude Bank of India from capital infusion in the current fiscal. “We are better off on return on equity (RoE) than many banks which have got capital in the Government infusion plan... We got in touch with the Government and said Bank of India, Bank of Baroda and SBI are internationally active and have to be classified differently… Maybe we could have got a transition period or so,” Iyer said. She added that there would be second tranche of capital infusion with balance ₹4,000 crore still to be allotted.

Payments bank stake

Bank of India is planning to buy a 19.9 per cent stake in payments bank licence aspirant YouFirst Money Express Pvt Ltd. “Payment bank is an investment for us. We will be investing to pick up 19.9 per cent stake of the ₹100 crore (minimum paid-up) capital needed,” said Iyer.

Given that there is a huge unmet demand for banking, Iyer said such tie-ups will expand the scope of services that can be offered to retail customers.

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