Bank of India posted a meagre 12 per cent increase in net profit in the third quarter ended December, at Rs 803 crore on higher provisioning and modest growth in advances.

The public-sector lender’s net profit stood at Rs 716 crore in the year-ago period. Profits were also backed by a sharp fall in tax expenses at Rs 137 crore (Rs 323 crore).

Net interest income (difference between interest earned and expended) rose 12 per cent to Rs 2,308 crore (from Rs 2,067 crore).

Provisioning were up 32 per cent to Rs 916 crore (from Rs 693 crore) dragging the profit down. During the quarter, net advances grew by 20 per cent, while deposits grew slower at 14 per cent.

“Major advances growth was on account of loans to gems and jewellery and construction segment,” said V.R. Iyer, Chairman and Managing Director, Bank of India.

“We have not focused on retail so far. Therefore, the bank sees huge scope and we want to grow our retail book to 20 per cent in the next one year from 11 per cent at present,” Iyer said.

“Restructured book in the quarter stood at Rs 2,206 crore of which textile constituted 40 per cent, while steel was 10 per cent. While aviation and infrastructure contributed to the total restructured book at Rs 15,853 crore as on December 31, 2012,” Iyer added.

The percentage of net NPAs was also higher at 1.97 per cent compared with 1.78 per cent as at the end of December 31, 2011.

Net interest margins declined to 2.36 per cent from 2.55 per cent in the October to December quarter last year. For the fiscal year 2012-13, the bank aims to grow NIMs at 2.6 per cent.

“Our outlook for credit growth stands at 16 per cent, while net NPAs will be reduced to 1.80 per cent on the back of more recoveries and upgradations,” the Chairman said.

The bank said growth in current and savings account, expansion of retail and small and medium enterprises, credit monitoring and recovery would be some of the focus areas.

The bank will raise foreign currency loan under the medium term note (MTN) programme in this fiscal.

Further, a senior official said the banks could cut interest rates to the extent of 50 basis points over one-year period if the central bank cuts rates tomorrow.

The bank’s shares ceded initial gains to end trade at Rs 355.25, lower by 2.51 per cent, on the Bombay Stock Exchange.

> Beena.parmar@thehindu.co.in