Bank Of India Q1 Net Down 28 Pc At Rs 517.5 CrMumbai, Jul 25: State-owned Bank of India (BoI) today posted a 28 per cent decline in net profit at Rs 517.5 crore for the first quarter ended June 30, as the bank moved towards system
Mumbai, Jul 25: State-owned Bank of India (BoI) today posted a 28 per cent decline in net profit at Rs 517.5 crore for the first quarter ended June 30, as the bank moved towards system recognition of non-performing assets (NPAs).
It had posted a net profit of Rs 725.1 crore for the corresponding quarter of the last fiscal, the bank said.
“The bank moved towards a system recognition of NPA and this resulted in slippages of Rs 1,684 crore.
The system recognition reverses any interest charged on these accounts that were 175 crores, which also affected the NIMs (Net Interest Margins) and the profit,” bank's Chairman and Managing Director Alok K Misra told reporters here.
“The Q1 2011-12 has been a challenging quarter for our economy and a difficult one for the banks. The results of Q1 should be seen against the back drop of the overall economic scenario,” he added.
Misra said the bank had identified slippages worth Rs 680 crore in the agricultural, Rs 360 crore in the infrastructure lending, Rs 200 crore in the small and medium enterprises advances, and Rs 180 crore in the retail lending.
The bank also plans to raise Rs 4,500 crore to fuel its expansion plans but did not divulge any details on the fund raising process.
The total income of the bank during the period increased by 34.8 per cent at Rs 7,293.6 crore as compared to Rs 5,407.6 crore during the year-ago period.
The interest income of the bank rose to Rs 6,633.5 crore as compared to Rs 4,821.7 crore in the same quarter in the previous fiscal.
BoI's gross (NPAs) declined marginally to 2.69 per cent during the quarter ended June 30 from 2.71 per cent in the same quarter an year ago.
Asked if the bank would increase its base rate if the Reserve Bank of India were to hike its key interest rates, Misra said, “We did not raise rates the last time, so this time we will have to raise rates”. He added that the bank would immediately increase its rates.
The bank's Executive Director N Seshadri said the bank was lagging by 25 basis points in the base rate as it did not raise its rate the last time but said it was on par with other banks on the deposit rates and wasn't likely to hike it.
Misra said the bank's credit offtake is likely to be 20 per cent by the fiscal as against the target of 22 per cent, and the deposit would grow at 17 per cent by fiscal-end against the earlier target of 20 per cent. He added that the bank should be able to maintain its NIM at 2.50 per cent by the fiscal end.
The bank plans to open 400 branches during the year and has opened 100 of them. It also intends to increase its global presence and will open four new branches, Misra said.
“We plan to open branches in New Zealand, Uganda, Botswana and South Africa,” he said. PTI