Bank of India (BoI) reported a 98 per cent year-on-year (y-o-y) jump in standalone net profit at ₹526 crore in the second quarter (Q2) ended September 30, 2020, against ₹266 crore in the year-ago quarter.

The bottomline was supported by 22 per cent growth in non-interest income and 7 per cent increase in net interest income.

Loan-loss provisions

This jump in profit comes despite loan-loss provisions rising 47 per cent to ₹2,134 crore in Q2 FY21 against ₹1,452 crore in the year-ago period.

However, net profit in the reporting quarter is lower than the preceding quarter’s ₹844 crore.

AK Das, MD and CEO, BoI, attributed the robust y-o-y growth in bottomline to improved operating efficiency on the back of all-round business growth, driven mainly by uptick in retail, agriculture and MSME (micro, small and medium enterprises) advances, and improvement in asset quality.

The Mumbai-headquartered public sector bank’s net interest income rose 7 per cent year-on-year (y-o-y) to ₹4,113 crore (₹3,860 crore in the year-ago quarter). Total non-interest income was up 22 per cent y-o-y to ₹1,613 crore (₹1,327 crore).

Operating profit rose 26 per cent y-o-y to ₹3,098 crore (₹2,460 crore).

Gross non-performing assets (NPAs) declined by ₹1,556 crore during the reporting quarter to ₹56,232 crore as of September-end 2020.

Das said the bank is eyeing recoveries of ₹2,500 crore each in the third and fourth quarters.

Overall, the bank has set NPA reduction target of ₹12,000 crore in FY21 and, as of now, it is more than half way through the target, he added. BoI plans to sell bad loans aggregating up to ₹700 crore to Asset Reconstruction Companies.

GNPAs came down to 13.79 per cent of gross advances against 13.91 per cent in the preceding quarter.

Net NPAs position improved to 2.89 per cent of net advances against 3.58 per cent in the preceding quarter.

Das observed that the bank is targeting to reduce GNPAs to below 12 per cent and NNPAs to about 2.50 per cent by March-end 2021.

As of September-end 2020, global deposits rose 17 per cent y-o-y to ₹6,07,529 crore. Global advances increased 8 per cent y-o-y to ₹4,07,871 crore.

FY21 credit growth

The BoI chief pegged FY21 credit growth at over 7 per cent, powered by growth in RAM advances, and deposit growth of about 10 per cent.

Global net interest margin (NIM) declined to 2.66 per cent in Q2 FY21 against 2.99 per cent in Q2 FY20. Das said NIM could hover around 2.75 per cent by Q4.

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