Public sector lender Bank of India 's (BoI) third quarter (October-December) net profit rose nearly 10% year-on-year to Rs 716 crore on the back of lower provisioning due to improved asset quality. The numbers were better than the market expectations.
The net interest income (NII) or the difference between interests earned and paid up crawled up 4% y-o-y to Rs 2,067 crore. CNBC-TV18 had expected net profit of Rs 619 crore and NII of Rs 2,033 crore.
The bank's global (domestic + foreign) loan book expanded 21% y-o-y to around Rs 2.33 lakh crore while the domestic credit off-take saw rather a muted growth of just 8% at around Rs 1.63 lakh crore. The global net interest margin increased to 2.55% versus 2.44% a quarter back.
"We have revised our domestic credit growth target from 17% to 15.5%," Alok K Misra, Chairman and Managing Director, Bank of India told Moneycontrol.com.
"It was a conscious decision to grow slow on corporate credit compared to retail side. So far, our incremental credit growth (domestic) has been flat. We have replaced Rs 14,000 crore low yielding short term loans by high yielding mid corporates and retail credit. This has resulted into lower growth (between April 01 and Dec 31)," he said.
The Reserve Bank of India has revised the industry's credit growth projection from 18% to 16% in its December quarter monetary policy. In the three months period, the BoI's corporate book grew by 10% as compared with 15% rise in retail loans.
The lender's provisions (other than tax) and contingency fell 40% sequentially to Rs 693 crore. The gross non-performing asset (NPA) ratio improved from 3.02% to 2.74% quarter-on-quarter. The net NPA ratio too declined from 1.98% to 1.78%.
During the quarter, BoI has restructured assets worth Rs 2,233 crore wherein a single large corporate account accounted for two third of it. The bank said it has recognised loans given to Kingfisher Airlines as a non performing loans and GTL in restructured assets.
BoI's credit exposures to aviation and power sectors are Rs 4,000 crore and 12,900 crore respectively. According to N Seshadri, an executive director of the bank, it has stopped extending fresh credit to the troubled state electricity boards (SEBs). Out of total power sector loans, SEBs account for Rs 6,500 crore.
"Many SEBs including Tamil Nadu, Rajasthan, Delhi, Andhra and Hariyana have already hiked their tariff. In case of an increase in tariffs, they would not require any bank loan any more," said Seshadri.
Domestic deposits climbed more than 14% y-o-y to around Rs 2.44 lakh crore while global deposits shot up nearly 22% to Rs 3.07 lakh crore.
In the October-December quarter, the bank's international business grew at a much higher pace than its domestic segment. The foreign business spurted 67% y-o-y to Rs 1.33 lakh crore as against 11.50% rise in the domestic arena at Rs 4.08 lakh crore.
BoI shares on Friday closed at Rs 353, up 3% on the NSE.
Source: www.moneycontrol.com
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