Mumbai: State-run Bank of India (BoI) today reported a massive 70 per cent dip in its net profit at Rs 173 crore in the quarter to December, from Rs 586 crore a year ago, driven down by a spike in bad loans and the resultant higher provisioning.
"Our performance in the current quarter has shown stress on asset quality. We have been making higher provisions of 40 per cent on doubtful assets as against 25 percent required by the regulator," chairperson and managing director Vijaylaxmi Iyer told reporters here today.
The bank also increased provision for wages in the quarter. "We have been providing 11 percent and now in Q3 we have provided for 13 percent retrospectively from November 2012 onwards, pulling down so that is the hit we taken," Iyer said.
The market hammered the BoI counter with the stock falling around 6 per cent to close at Rs 227.65 on the BSE, whose main gauge Sensex rose close to 1 per cent.
The bank's total provision increased to Rs 1,692 crore in the period from Rs 1,558 crore.
"On the asset quality front, we are continuing to face pressure. This is because of the prolonged slowdown which has affected credit growth as well revenues of corporates," Iyer said.
The gross non-performing assets rose to 4.07 percent as against 2.81 percent last year same period. Net NPAs stood at 2.50 per cent as against 1.75 percent. Provision coverage ratio of the bank stood at 56.62 percent.
Iyer expects the GNPAs level to be contained below 4 per cent and NNPAs below 2.30 per cent this fiscal and is also hopeful of asset quality pressure easing in the second half of the next financial year.
The bank saw Rs 3,356 crore worth of fresh loans becoming NPAs in the period.
The bank recovered Rs 481 crore of loans and upgraded Rs 206 crore of loans in the quarter. It also wrote off Rs 64 crore of loans. The lender sold only one non performing loan in cash to asset reconstruction in the quarter.
Total restructured assets as of December 31 stood at Rs 3,989 crore and during the December quarter it restructured Rs 769 crore of loans. It has a restructuring pipeline of Rs 1,000 crore in the fourth quarter.
Global business increased to Rs 9,40,623 crore, up 16.03 percent from Rs 8,10,687 crore. Domestic business rose 17 percent to Rs 6,72,225 crore from Rs 5,75,117 crore. Domestic deposits increased by 16.60 percent to Rs 3,96,122 crore y-o-y while advances grew 17.29 per cent to Rs 2,76,103 crore.
The bank is targeting a loan growth of 10-12 percent and a growth of 12 per cent in the current fiscal. Iyer said the bank has tied up with YouFirst Money Express for payment bank, wherein it will be investing around 19.9 percent.
"This will help us to cross sell and credit opportunities for us will be more," Iyer added.
