Higher Margins, Loan Sales Take Bank of India Q3 Net Profit Up 12% At Rs 1,151 Crore

Better asset quality and the resultant lower provisioning along with higher net interest margin helped public sector lender Bank of India record a 12 per cent rise in net profit at Rs 1,151 crore for the quarter ended December 2022.

Total income rose to Rs 14,159.60 crore in the reporting quarter from Rs 11,211.14 crore a year ago, the city-based bank said on Tuesday.

The bottom line was boosted by higher domestic net interest margin which rose by 121 basis points (bps) to 3.72 per cent year-on-year and by 23 bps sequentially, while global margins improved by 101 bps to 3.28 per cent on-year and by 24 bps sequentially, managing director and chief executive A K Das told reporters in a conference call.

As a result along with higher loan sales saw the bank's net interest income soaring 64 per cent to Rs 5,596 crore from the year ago period, he said, adding, however, non-interest income declined to Rs 1,432 crore from Rs 1,835 crore primarily roiled by treasury losses.

He, however, guided for a moderation in the full year margin to around 3.25 per cent as the deposits get repriced. As the bank is yet to fully increase the deposit rates, the reporting quarter saw its yield on advances rising by 65 bps to 7.67 per cent on-year and by 46 bps from the previous quarter.

Das said on the asset quality front, the bank recorded an improvement with gross non-performing assets declining by 280 bps to 7.66 per cent and net bad loans easing by 105 bps to 1.61 per cent in the reporting three-month period. This has helped the bank to maintain the capital adequacy ratio at 15.60 in the December quarter.

Most of the emerging stressed accounts are in the metals, mining and retail spaces, he added.

Improved asset quality helped the bank in making lower provisions, even though in absolute terms the provisions rose, due to aging accounts, from Rs 693 crore to Rs 1,089 crore in the quarter. However, provisions for standard assets declined to Rs 806 crore.

The management also expressed confidence in bringing down the bad loan ratio to under-7 per cent, as guided in the beginning of the year, by the March quarter.

He also said slippage ratio improved to 0.27, 20 bps lower, and it will be maintained under-1 going forward.

Global business rose 9.52 per cent to Rs 11,61,441 crore, of which deposits increased 4.91 per cent to Rs 6,53,691 crore and advances jumped 16.08 per cent to Rs 5,07,750 crore. 

Domestic deposits inched up 2.08 per cent to Rs 5,56,707 crore, of which low cost CASA went up by 3.70 per cent to Rs 2,46,718 crore, or 44.56 per cent of the total deposits. Domestic advances increased by 11.57 per cent to Rs 4,26,622 crore.

Of the total advances, retail credit grew 20.95 per cent to Rs 91,371 crore and rural credit including agri-lending rose 13.24 per cent and the same now constitutes 54.14 per cent of the total advances. 

Agri lending alone grew 9.15 per cent to Rs 70,334 crore and MSME book grew by 8.27 per cent to Rs 69,250 crore.

Das, however, guided for a moderation in advances growth and closing the year at 11-12 per cent.

The BoI counter tanked 4.55 per cent to Rs 93.35 on the BSE, while benchmark gauge Sensex rallied nearly 1 per cent.