Bank of India clocks 26% increase in net profit

The bank will be raising $750 mn in Q3 via medium term bonds

Beating market estimates, Bank of India has posted 26 per cent rise in net profit at Rs 786 crore for the quarter ended September. The bottomline received a boost from expansion in interest income, including that from upgraded accounts and reversals of provisions.

Market estimated net profit of Rs 762 crore, according to Bloomberg estimates. The net profit for the second quarter of last financial year (July-September 2013) was Rs 622 crore.

Elucidating the rise in net profit, Bank of India (BOI) Chairperson and Managing Director V R Iyer said the bank made substantial recoveries from bad loans and booked interest income for them. Also, prudential provisions made for them were reversed.

BOI stock closed flat at Rs 285 on the BSE on Monday.

The net interest income (NII), interest earned minus interest expenses, for this quarter rose by 20 per cent to Rs 3,031 crore from Rs 2,527 crore. Its net interest margin (NIM) improved to 2.31 per cent from 2.29 per cent in the second quarter of 2013-14. The non-interest income fell to Rs 1,006 crore from Rs 1,100 crore in July-September 2013.

Its advances rose by 18.5 per cent from Rs 3,36,823 crore to Rs 3,99,288 crore. The credit in demand is yet to pick up as corporates are still deleveraging. The bank has focused on expanding overseas loan book which clocked a year-on-year growth of 25.7 per cent. BOI expects the loan portfolio to grow at 15-16 per cent for the year ending March 2015, Iyer said.

The bank’s deposits rose by 19.9 per cent to Rs 5,18,432 crore. The share of low cost — current and savings — deposits was 28.2 per cent down from 30.44 per cent a year ago.