Bank of India (BoI) reported a 63 per cent year-on-year (y-o-y) jump in second quarter standalone net profit at ₹2,374 crore on the back of robust increase in other income, write-back in provisions for standard & other assets and lower taxation.

The profitability comes despite the public sector bank seeing 111 per cent y-o-y jump in loan loss provisions at ₹1,427 crore (₹678 crore in Q2FY24). The reporting quarter also saw a lumpy slippage of about ₹1,000 crore on account of a state-owned telecom company. BoI had reported a net profit of ₹1,458 crore in the year ago quarter.

Net interest income (difference between interest earned and interest expended) in the reporting quarter edged up 4 per cent y-o-y at ₹5,986 crore (₹5,740 crore in the year ago period).

Other income, including fee-based income, treasury income and recovery in written-off account, rose about 49 per cent y-o-y to ₹2,518 crore (₹1,688 crore).

Rajneesh Karnatak, MD & CEO, observed that the compression in the interest income is due to the RBI circular, which requires penal interest, which banks earlier used to book under interest income, to be booked under non-interest income. Hence, there is some increase in the non-interest/other income.

While loan loss provisions jumped 111 per cent, the bank received a write-back of ₹384 crore (against a provision of ₹173 crore in Q2FY24) from provisions made towards standard assets and others. Provision towards taxes halved to ₹731 crore (₹1,479 crore).

Global net interest margin (NIM) declined to 2.82 per cent against 3.08 per cent in the year ago period. Karnatak expects the bank to end FY25 with a global NIM of 2.90 per cent.

Gross Non-Performing Assets (NPAs) position improved to 4.41 per cent of gross advances as at September-end 2024 against 5.84 per cent as at September-end 2023. Net NPAs position too improved to 0.94 per cent of net advances against 1.34 per cent.

Global advances were up 14.51 per cent y-o-y to ₹6,21,919 crore as at September-end 2024. Global deposits increased by 10.15 per cent y-o-y to ₹7,75,181 crore.

“We have adequate (resource) cushion available. We have excess SLR securities of about ₹40,000 crore and have taken refinance and mobilised resources via CDs. We raised ₹2,500 crore via tier-2 bonds, and ₹5,000 crore via infra bonds. So, we were able to garner enough resources to fund the credit growth...We have a loan sanctions (corporate, RAM and international credit) pipeline of nearly ₹70,000 crore. This is more than 10 per cent of our global credit book,” Karnatak said.

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