Bank of America net jumps on high fee, interest income

FOREIGN BANKS ON A ROLL

Bank of America (BoA) today reported a 35 per cent rise in the net profit of its India branches in the year ended March 2007, buoyed by a growth in interest as well as fee-based income.

The net profits for the year were Rs 1,95.5 crore, compared with Rs 1,44.5 crore a year earlier, on the back of higher revenues and better earnings margins. Its revenues grew 24 per cent to Rs 6,74.4 crore.

The bank's India business reported a consolidated net profit of Rs 2,04.2 crore, reflecting a growth of 35 per cent, while the total revenues grew by 23 per cent to Rs 6,96.5 crore.

"We have seen a steady, well-distributed growth with our net interest revenues and non-interest revenues growing by 24 per cent and 23 per cent respectively," said Vishwavir Ahuja, managing director and country executive officer for India.

The bank's net interest income increased by 24 per cent to Rs 2,49.5 crore in 2006-07 from Rs 2,00.5 crore a year earlier and the non-interest income grew by 23 per cent to Rs 2,44.3 crore from Rs 1,98.3 crore a year earlier.

"This included income from segments such as risk management and hedging services, domestic and offshore capital raising, foreign exchange management services, higher treasury income and other fee-based activities. We also expect activities such as credit derivatives and commodity derivatives to contribute to the income," said Ahuja.

The bank's total assets increased by 5.9 per cent to Rs 6,318 crore at the end of March 2007, from Rs 5,965 crore a year earlier, while the investments grew by 13 per cent to Rs 1,886 crore and the advances fell by 10 per cent to Rs 3000 crore from Rs 3,369 crore a year earlier.

"Commercial papers (CPs) are tantamount to loans. Our investments in CPs have gone up," said a senior bank official.

The bank's deposits grew by 29 per cent to Rs 2,718 crore from Rs 2,106 crore a year earlier. The bank will retain the entire net profit earned in 2006-07 to boost the capital of the Indian operations.

BoA's subsidiary, Banc of America Securities India, reported over 3 per cent increase in revenues comprising interest and other income to Rs 22 crore in 2006-07. The subsidiary's net profits increased to Rs 8.7 crore from Rs 7.1 crore a year earlier.