Bank of India Q1 net profit rises 8% to Rs 951 million, stock falls 8.75%

State-owned lender Bank of India (BoI) on Tuesday reported a profit of Rs 951 million in the first quarter ended June, against a loss in the March quarter, as the bank focused on retail loans while shrinking its corporate book.

In the first quarter a year ago, BoI had registered a loss of Rs 39.7 billion. In the second quarter, the bank had reported profit of Rs 877 million. Bank of India is the largest bank under prompt corrective action (PCA) framework of the Reserve Bank of India (RBI).

Dinabandhu Mohapatra, MD and CEO of BoI, said he expected the bank to remain profitable in the second quarter, too. Mohapatra said numbers were getting better for the bank, and this should allow it to come out of the framework fast. The bank also showed some improvement in its asset quality in absolute terms, even as the NPA percentage went up marginally owing to contraction in advances.

Gross NPA in absolute terms was at Rs 606.04 billion, against Rs 623.28 billion in the March quarter. In terms of gross NPA ratio, it was at 16.66 per cent in the June quarter, against 16.58 per cent in the March quarter.

The bank said it was trying to sell non-core assets and in the second quarter would see better realisation of assets through sale to asset reconstruction companies (ARCs). The bank has identified around Rs 80 billion worth of stressed assets for sale to ARCs. 

The BoI witnessed Rs 39 billion worth of write-off from its books after making full provisions against these loans, but recovery effort will continue, Mohapatra said.

The share of the bank fell 8.75 per cent to Rs 94.35 a piece on BSE.