Bank of India, which saw its net profit surge 176% in the first quarter of the current fiscal, hopes to contain its non-performing loans at below 6% while eyeing credit growth of 12% in FY24.

The state-owned lender’s net profit in the quarter ended June increased to Rs 1,551 crore from Rs 561 crore a year before, helped by a decline in bad loans. 

The lender's interest income increased to Rs 14,359 crore from Rs 9,973 crore.

The total income in the April-June quarter rose to Rs 15,821 crore versus Rs 11,124 crore in the same period a year ago.

The bank’s operating profit rose 72% YoY to Rs 3,752 crore. 

NII and NIM

Net interest income (NII) rose 45% YoY to Rs 5,915 crore in the quarter ended June 2023.

Net interest margin (NIM) increased to 3.37% in the June quarter against 2.87% in the year-ago quarter.

The bank’s non-interest income rose 27% YoY to Rs 1,462 crore in Q1FY24 compared to Rs 1,152 crore a year before.

Asset quality

The bank reduced its gross NPA ratio to 6.67% from 9.30% a year before.

Net NPA fell to 1.65% as against 2.21% in the same quarter of the previous year.

“We expect the gross NPA ratio to contain below 6% and credit cost between 0.6-0.7% in the current financial year. We aim at maintaining NIM above 3%, thus ensuring sustainable growth in profit,” said Bank of India managing director and CEO Rajneesh Karnatak.  

Provisions

Provisions for bad loans came down to Rs 777 crore compared to Rs 1,304 crore a year ago.

Provision coverage ratio increased to 89.52% as of June 2023 against 87.96% at the end of the first quarter of the previous financial year.

Deposits

Domestic deposits rose 7.98% YoY to Rs. 5.89 lakh crore in the fiscal first quarter ended June. 

CASA (current account savings account) deposits increased by 7.56% YoY to Rs. 2.6 lakh crore in the June quarter. CASA ratio stood at 44.52%.

Advances

Domestic advances increased by 7.98% YoY to Rs. 4.33 lakh crore.

“We expect credit growth of around 11-12% during the current financial year,” said Karnatak. We will keep a conscious mix of risk assessment model and corporate advances at a 55:45% ratio. In the RAM sector, we will grow in retail, agriculture, and MSME book. The growth will be agnostic to any particular industry. On the deposit side, we are giving a guidance of around 10% growth,” Karnatak said.  

RAM advances of the bank rose 11.75% YoY, accounting for 55.39% of the total advances in the quarter. 

The lender’s global business crossed the milestone of Rs 12 lakh crore. It ended the June quarter at Rs 12.14 lakh crore, marking an 8.61% YoY increase.

“In terms of international credit, we have a loan book of around Rs 85,000 crore as on June 2023, which was at around Rs 84,000 crore in March. Incremental growth has not been much because there were a lot of repayments during the quarter,” Karnatak said.