BoI posts R741-crore loss in June qtr as provisions soar

Mumbai, Aug 12: Public sector lender Bank of India (BoI) on Friday reported a net loss of Rs 741.4 crore for the quarter ended June 2016, compared with a profit of Rs 129.7 crore in the same quarter last year on the back of a 4.7% drop in net interest income (NII) — the difference between interest earned and interest expended — and a 82.9% jump in provisions.

In fact, if not for a 47.3% (y-o-y) jump in non-interest income to Rs 1,238.4 crore, the Mumbai-headquartered bank's performance would have been even worse.

Sequentially, however, BoI's performance in the June quarter was a big improvement from the net loss of Rs 3,587.1 crore that the bank had reported in the quarter ended March 2016, as provision requirements dropped 49.4% (q-o-q) to Rs 2,770.2 crore.

In terms of non-performing asset (NPA) management, while the June quarter saw Rs 6,233 crore turning non performing — the lowest in the last four quarters — it saw Rs 4,237 crore of reductions due to recoveries, upgradations and write offs.

With the bank's overall deposits dropping by over 2% (yo-y) and current account and savings account (CASA) deposits rising by over 13.4%, its CASA ratio improved by 366 bps (y-o-y) and stood at 35.33% at the end of Q1FY17.

According to the bank's MD & CEO Melwyn Rego, Mission Star One, the bank's intiative for NPA management, augmenting (CASA) deposits and rebalancing the loan portfolio in favour of the retail segment, has started showing results and the bank is targeting about 6% loan growth in FY17.

Rego said he is expecting Rs 17,500 crore of recoveries and upgrades for the full year and doesn't expect slippages to be more than that, which would mean that the bank would end FY17 with lesser NPAs than that at the beginning of the year.