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Bank of India (BoI) on Monday reported a net loss of ₹4,738 crore for the third quarter ended December 2018 as its bad loan provisions more than doubled to ₹9,180 crore mainly on account of the first 40 large accounts referred by the RBI for bankruptcy proceedings and also due to a fresh hit from the IL&FS crisis. For Q3 of FY18, it had posted a net loss of ₹2,341 crore.
BoI becomes the first state-run lender to be hit by the crisis at the IL&FS group, to which it has an exposure of ₹3,400 crore. In the quarter under review, it had resorted to accelerated provisions, including towards large corporate accounts referred to the National Company Law Tribunal (NCLT). This is BoI’s highest-ever quarterly loss.
During the reporting quarter, the public sector bank made loan loss provisions aggregating ₹9,179 crore, against ₹4,373 crore in Q3 FY18.
The ₹9,179-crore provisions include an additional provision of ₹4,321 crore made in view of the uncertainty of recovery of loan, and deterioration in the value of underlying assets.
Operating profit up
BoI’s operating profit, however, increased 68 per cent to ₹2,273 crore from ₹1,354 crore.
The bank’s MD & CEO Dinabandhu Mohapatra emphasised that the net bad loans position has improved following higher provisioning. Bad loans are seen declining, he added.
Net NPAs improved to 5.87 per cent from 10.29 per cent in the year ago quarter.
However, gross NPAs continued to be sticky (16.31 per cent of gross advances against 16.36 per cent in the preceding quarter).
Looking ahead
In the fourth quarter, BoI expects monetisation of non-core assets (₹1,000 crore plus), cash recovery (₹2,600 crore) from NCLT accounts, and recovery on sale of assets to asset reconstruction companies (ARCs).
The bank has put assets of about ₹11,000 crore on sale to ARCs so far this fiscal. It expects to put more assets on the block this quarter.
In the third quarter, BoI sold assets aggregating ₹3,248 crore to ARCs. The recovery from this sale was about ₹2,000 crore.
Mohaptra said BoI’s ₹3,400-crore exposure to the IL&FS Group excludes exposure to Dighi Port (for which the bank has fully provided for). The bank has non-fund based exposure to Jet Airways, which is not due as of today, he added.
As part of a cost-cutting exercise, BoI has merged 31 mid-corporate branches with large corporate/general banking branches, rationalised four overseas branches and two representative offices, and closed down 1,255 ATMs in FY19.
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