State-run Bank of India (BoI) today reported a net profit of Rs 102 crore in the third quarter ended December 31, helped by healthy treasury income and lower provisioning. The lender had reported a net loss of Rs 1,506 crore in the same period last year. In the second quarter of FY17, it reported a profit of Rs 127 crore.
“After four quarters of losses, the bank became profitable in second and third quarters of this financial year. This has been done by the implementation of our three-pronged strategy – NPA management, augmentation of CASA (current account savings account) and re-balancing of advances in favour of retail portfolio,” Managing Director and CEO Melywn Rego told reporters here.
Going forward, growth in the bank’s advances will be given significant priority, he added. The treasury operating income stood at Rs 3610 crore in the quarter. Total provisions reduced by 36 per cent to Rs 2,303 crore from Rs 3,604 crore. Net interest margin (NIM) on domestic operation improved to 2.65 per cent from 2.23 per cent. NIM on overseas operation also improved from 1.17 per cent to 2.21 per cent. Gross NPA stood at 13.38 per cent from 9.18 per cent a year ago, while net NPA was at 7.09 per cent as against 5.25 per cent. Provision coverage ratio was at 58.71 per cent.
Fresh slippages in the quarter was at Rs 3,210 crore and Rego said 50 per cent of the slippages came from oil and gas, steel and food processing sectors. Recovery, upgradation and write off combined together stood at Rs 3,691 crore, up from Rs 3,181 crore last year.
Watch What Else Is Making News
“During the fourth quarter what we see is the slippages, recovery and upgradation would balance out and there would be no incremental addition to NPAs,” Rego said.
He expects recovery and slippages to be at Rs 3,500 crore in the fourth quarter.
In Q3, the bank invoked scheme for sustainable structuring of stressed accounts (S4A) in four accounts with outstanding of Rs 502 crore. The Government announced to infuse Rs 1,784 crore in the bank during the financial year 2016-17. Of this, it received Rs 1,338 crore in September.
It had set a target to raise Rs 1,000 crore by monetising it non-core asset during the current fiscal. The Government lender raised nearly Rs 500 crore by selling 18 per cent stake in its life insurance venture and is looking to mop up another Rs 200 crore-300 crore in the fourth quarter. In the fourth quarter, the bank is planning to raise 1,000 crore-1,500 crore from additional tier I (AT1) bonds and an equal amount through tier II bonds, Rego said.
CASA deposits grew 38 per cent while its share in domestic deposits improved to 41 per cent in the quarter under review. Gross advances stood at Rs 387,028 crore, down marginally by 0.43 per cent from the second quarter of FY17. On year-on-year basis, advances declined by 2.74 per cent, mainly due to repayment of loan aggregating USD 1.4 billion (about Rs 10,000 crore) against FCNR B deposits which have now been redeemed during the quarter.
The bank expects a credit growth of 5-6 per cent in the current financial year, Rego said.