Bank of India profit up 21.5% at Rs 209 cr

Bank of India (BoI) has posted a 21.5 per cent rise in its net profit at Rs 208.73 crore for the first quarter ended June 2006 as against Rs 171.74 crore April-June 2005 due to the robust growth in the interest income.

The total income for the reporting quarter rose to Rs 2,331.70 crore from Rs 1,858.90 crore for the Q1 of 2005-06. The interest on income on advances rose to Rs 1,359.12 crore from Rs 1,027.96 crore.

"We have lent on our terms, which has helped us to grow interest income", BoI chairman and managing director M Balachandran said.

The total deposits rose by 19 per cent to Rs 95,814 crore as on June 2006 from Rs 80,492 crore a year ago. The cost of funds including deposits rose to 4.23 per cent at end of June from 4.02 per cent in March 2006, he said.

The advances grew to Rs 69,814 crore from Rs 57,432 crore. The yield on advances moved up to 8.77 per cent at end of June from 8.31 per cent. The bank would review its home loan rates soon following Reserve Bank of India's decision to hike reverse repo rate by .25 per cent.

The net interest margin improved to 2.70 per cent from 2.35 per cent a year ago. The net non-performing assets 1.43 per cent from 2.59 per cent at end of June 2005.

The capital adequacy ratio was 10.36 per cent as on June 30 compared to 10.60 per cent a year ago. The bank has raised capital worth Rs 700 crore last week through upper tier II bonds at coupon rate of 9.35 per cent.

Now that the RBI has allowed to raise hybrid capital overseas, BoI will raise hybrid capital of $330 million in the international market through combination of tier I perpetual bonds ($80 million) and upper tier II bonds ($250 million).

These would help to support growth in foreign currency assets and overseas expansion plans, Balachandran said.

Bank expects to establish subsidiary in Tanzania by September 2006 with minimum capital base of $ 20 million. It is also considering to forge three way joint venture with Dia-ichi Life Insurance and Andhra Bank to establish Life insurance company.