State-run lender Bank of India reported a 26 per cent rise in net profit for the three-month period ending September 2014 at Rs 786 crore aided by stable interest income, loan book and better recoveries.
Net interest income (NII -- difference between interest earned and interest expended) increased 20 per cent at Rs 3,031 crore, while non-interest income declined by 9 per cent to Rs 1,006 crore.
Net interest margins (NIM) improved to 2.31 per cent from 2.29 per cent a year-ago on the back of stronger international growth at 1.32 per cent from 1.02 per cent)
“Our NII and NIM improved primarily due to focus on recoveries and upgradations,” said VR Iyer, Chairperson and Managing Director, Bank of India.
The bank made recoveries and upgradations of about Rs 2,880 crore in the first half of this fiscal, higher than that of entire last year.
During the quarter, a write back from depreciation on investments helped lower the bank’s provisioning by 9 per cent to Rs 1,350 crore from Rs 1,481 crore in the year-ago period.
As on September end 2014, domestic advances grew 15 per cent to Rs 2.69 lakh crore driven by healthy growth in agriculture, retail and micro, small and medium sector loans. Domestic deposits rose 20 per cent on the back of healthy retail growth.
However, asset quality of the bank worsened with gross non-performing assets (NPAs) as a percentage of total advances grew to 3.54 per cent as on September 30, 2014 as compared with 2.93 per cent as on September last year.
“Asset quality will show signs of recovery after 2 quarters…We have not witnessed any uptick in credit demand as corporates are still deleveraging…It will take about a year or so for the government measures to impact the banking and financial sector,” Iyer said.
Giving the guidance, Iyer said the bank expects a loan growth of 14-15 per cent, NIM will be stable at 2.75 per cent and gross and net NPA at an “ambitious 3 per cent and 2 per cent”.
The bank will be raising $750 million from overseas under its MTN programme for a period of about 5 years under its headroom of $5 billion.
The bank has also set up merchant banking unit and will start operations within a month.
After falling ahead of the results, Bank of India shares ended marginally higher at Rs 285.95 per share, 0.2 per cent over the previous close on BSE.