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Posting its first quarterly loss since 1991, Bank of India posted a net loss of ₹56 crore, weighed down by a surge in bad loans and lower interest income in the January-March period of fiscal 2014-15.
The profit stood at ₹558 crore in the year-ago quarter.
“Major setback was due to the stuck projects and the delay in passage of Land Acquisition Bill… Also, the slowing economy, lower credit growth and slowdown in private investment are worries for the banking industry,” said Vijayalakshmi Iyer, Chairperson and Managing Director of the bank.
Net interest income (difference between interest earned and expended) declined 7 per cent, while non-interest income grew 24 per cent to ₹1,122 crore.
Total provisions towards bad loans almost doubled to ₹2,240 crore (₹1,135 crore, a year ago).
Gross non-performing assets (NPA) increased to 5.39 per cent of total advances as on March end this year as against 3.15 per cent as on March last year.
The bank expects this ratio to drop below 4.5 per cent for the fiscal year running to next March.
About 45 per cent of the fresh NPAs during the fourth quarter were from the infrastructure sector, which accounts for about 17 per cent of the bank’s loan book.
“Overall, I do believe that the worst is over,” although sectors such as infrastructure remain a key concern for the bank, Iyer said.
Iyer added that about 41 per cent of the gross NPAs were on account of technical reasons. “About ₹3,500 crore of these loans would be upgraded in the first quarter, and this is a conservative figure, it could be more.”
“The cleaning up is almost getting over,” said Iyer, who is due to retire at the end of this month after a stint of two-and-a-half years.
“I didn’t want to leave any problem for my successor.”
Full-year performance For the full year as well, the net profit declined 37 per cent to ₹1,709 crore form ₹2,729 crore in FY14.
Bank of India shares ended weaker by over 6 per cent at ₹191.40 apiece on the BSE.
To cut stake in insurance JV State-owned lender Bank of India will dilute its stake in Star Union Dai-ichi Life Insurance to 30 per cent, said Vijayalakshmi Iyer, Chairperson and Managing Director of the bank.
Star Union Dai-ichi Life is a joint venture between Bank of India (48 per cent stake), Union Bank of India (26.5 per cent) and Tokyo-based Dai-ichi Life Insurance (26 per cent).
“We are looking at bringing down our stake in our life insurance joint venture from 48 per cent to 30 per cent…Valuations are under way,” Iyer said in a post-results conference.
Earlier, she had said that her bank will dilute its stake in other subsidiaries/associates, such as STCI Finance (stake: 29.96 per cent); Indo Zambia Bank Ltd (20 per cent); and PT Bank of India (Indonesia) Tbk (76 per cent).
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