BoB net jumps 17.5%

With a modest rise in net interest income (NII) and decline in treasury income, Bank of Borada (BoB) has posted a net profit growth of 17.5 per cent to Rs 832.49 crore for the quarter ended December compared to Rs 708.37 crore recorded in the same period of the previous year.

Its net profit was mainly driven by a rise in core fee income, which went up by 33.6 per cent to Rs 230.92 crore during the reporting period. NII, which is the difference between interest earned and interest paid, was up only 9.5 per cent during the quarter. Other income, on the other hand, declined by 22.07 per cent to Rs 659.65 crore resulting in its total income coming down by 2.38 per cent to Rs 4,836.62 crore.

Profit on sale of investment came down to Rs 139 crore during the period from Rs 414 crore in the comparable period last year mainly due to rising bond yields, the bank said. However, profit on sale of investment was aided by a one-time gain of Rs 69 crore during October –December of 2008-09 due to winding up of the bank’s holding in one of its subsidiaries.

Margins, however, improved sequentially due to increase in low-cost deposits. Net interest margins (NIMs) from domestic operations in the quarter stood at 3.4 per cent, up from 2.89 per cent recorded in the second quarter. Chairman MD Mallya said NIMs might further improve by a few basis points (bps) in the fourth quarter. Fall in cost of deposits by about 90 bps from domestic operations also helped in improving the margins.

The low-cost deposit or the current and savings account deposit (Casa) rose 24.6 per cent as of December-end, and as a result, the share of Casa to total deposits increased to 37 per cent from 36.17 per cent September-end.

Net advances increased to 23.5 per cent to Rs 1,56,171 crore as of December-end, while deposits went up by 27.6 per cent to Rs 215,117 crore. The bank is aiming for a 21 per cent increase in advances and 22 per cent increase in deposit in 2009-10.

Gross non-performing asset (NPAs) increased to Rs 2,260.27 crore as of December-end from Rs 1,921.42 crore in the year-ago period, and net NPA increased to Rs 487.68 crore from Rs 472.58 crore. However, both gross and net NPA ratios declined to 1.43 per cent from 1.5 per cent and 0.31 per cent from 0.37 per cent, respectively.

Provision coverage ratio of the bank stood at 78.42 per cent.