A sharp increase in provisions for bad loans hurt Bank of India’s net profit, which dropped 27 per cent in the third quarter ending December 2013 at ₹586 crore.
Provisions or amount set aside for stressed assets, jumped 53 per cent to ₹1,404 crore from ₹916 crore in the corresponding quarter of the last fiscal year.
Further, provisions rose as restructured assets worth ₹298 crore had to be declared as non-performing according to the RBI’s classification norm.
“Without these provisions, our profit would have been boosted by ₹110 crore,” said VR Iyer, Chairperson and Managing Director of the bank.
Asset quality improves Asset quality improved marginally with gross non-performing assets ratio as a percentage of total advances at 2.81 per cent as on December, 2013 from 3.08 per cent as on December, 2012.
Net interest income rose 18 per cent and non-interest income increased 17 per cent year-over-year.
Advances Total advances grew 25 per cent driven by robust growth in agriculture, corporate and retail portfolio.
During the quarter, the bank restructured assets worth ₹1,146 crore as against ₹1,996 crore in the same quarter a year ago.
“Our restructuring pipeline is expected to be at ₹1,500-1,700 crore this quarter,” Iyer said.
Focus on recoveries helped the bank recover loans worth ₹847 crore in hard cash.
Bank of India also sold assets worth ₹1,744 crore to asset reconstruction companies
The sharp drop in net profit hit the bank’s shares which ended weaker at ₹186.35 a share, down by 10.47 per cent over the previous close on the Bombay Stock Exchange.