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New BoI chief splashes red ink all over, net loss at Rs 1,126 cr

BOI

Mumbai: State-run Bank of India on Monday reported a massive net loss of Rs 1,126 crore for the quarter to September, as against a net profit of Rs 786 crore a year ago, as its bad loans more than doubled to 7.55 percent which pushed up its provisions more than trebled.

The city-headquartered lender’s gross non-performing assets more than doubled to 7.55 percent of total loans from 3.54 percent in the same period last fiscal, while net NPAs nearly doubled to 4.31 percent from 2.32 percent a year ago.

Similarly, the bank saw more and more assets turning bad during the quarter with fresh slippages more than doubling to Rs 6,251 crore from Rs 2,971 crore a year ago.

These sets of red marks come even as the bank improved its margins and lowered its bulk deposits with net interest margin improving from 2.27 percent in March 2015 to 2.77 percent in September 2015. The bank did not share the y-o-y NIM.

The rot was more visible as the bank’s asset had a negative growth — 0.88 percent during the quarter while on an average public sector banks have reported around 10 percent uptick in advances.

“The bank made provisions for bad and doubtful debt worth Rs 3,036 crore in Q2 against Rs 792 crore a year ago,” its newly-appointed managing director and chief executive Melvin Rego told reporters here this evening.

The bank also made higher provisions for pension liability at Rs 353 crore during the period under review, which was based on revised data provided by LIC in which the life expectancy has gone up to 81 years from 75 years earlier.

Total provisions, excluding taxes, more than trebled to Rs 3,237 crore in the second quarter as against Rs 963 crore in the year-ago period, he said.

Net interest income stood at Rs 3,020 crore, and other income stood at Rs 778 crore during the reporting period.

Rego said total income came down to Rs 11,318 crore in the quarter under review from Rs 12,099 crore in the corresponding period last fiscal.

The low-cost Casa of the bank improved to 31.22 percent from 28.40 percent.

“I would like to mention that CRAR, provision coverage ratio, net interest margin and CASA ratios have shown significant improvement,” he said.

Provision coverage ratio has increased from 52 percent in March 2015 to 55 percent in September 2015. Due to shedding of high cost deposits, the net interest margin on domestic advances has, in fact, increased from 2.27 percent in the March 2015 to 2.77 percent in the September 2015, which means an increase of 50 bps.

PTI