Bank of India Q2 net income falls 10% to Rs 960 cr on higher provisioning

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State-owned Bank of India on Thursday reported a nearly 10 per cent decline in net income to Rs 960 crore for the September 2022 quarter on higher provisioning, which more than doubled to Rs 1,912 crore.

The bank had made a provision of only Rs 894 crore in the year-ago period, which negated other improvements in the key numbers, such as net interest income rising from Rs 9,523 crore to Rs 11,497 crore and lower taxations at Rs 502 crore in the reporting quarter against Rs 733 crore.

Another reason for the fall in the bottom-line is the higher interest outgo, which rose from Rs 6,000 crore to Rs 6,414 crore.

The bank has registered a sharp uptick in net interest income to Rs 5,083 crore in the reporting quarter from Rs 3,523 crore in the year-ago period.

The NII jumped sharply as the bank booked higher margins from loans as it had passed on the repo rate hike to borrowers. Accordingly, it booked a NIM of 3.04 per cent, up 64 bps from 2.42 per cent in the year-ago period and from Rs 2.55 per cent in the June quarter.

On the asset quality front, the bank said its net NPAs improved to 1.92 per cent from 2.79 per cent year-on-year or at Rs 8,836 crore from Rs 10,576 crore.

Its gross NPAs declined sharply to 8.51 per cent or Rs 42,014 crore from 12 per cent or Rs 50,270 crore. This had its slippage ratio slipping to 0.30 from 0.36 and the credit cost ratio jumping nearly threefold to 0.60 from 0.26.

Advances rose to Rs 8,130 crore from Rs 6,510 crore, while deposits remained stagnant at Rs 5,702 crore.

Bank of India managing director AK Das said provisions ballooned as there were a few large accounts that defaulted for a few days towards the end of the quarter, forcing it to fully provide for those accounts.

The bank made much lower recoveries during the quarter with the same falling to a third from Rs 3,218 crore to Rs 1,340 crore, but upgrades improved to Rs 471 crore from Rs 278 crore and so did the written-off accounts, which fell to a third from Rs 3,583 crore to Rs 1,883 crore. This helped the bank to nearly halve its bad loan quantum to Rs 3,694 crore from Rs 7,079 crore.