Higher provisioning and lower margins weighed on Bank of India’s profitability in the fourth quarter ended March 31, 2013.
The public sector bank’s net profit fell 21 per cent in the reporting period to Rs 757 crore. The decline in profit came despite a prudential write-back of Rs 192 crore on account of taxation.
Net interest income (difference between interest earned and expended) declined marginally to Rs 2,476 crore.
Provisions towards bad loans more than doubled to Rs 1,089 crore during the quarter.
Net interest margin fell to 2.46 per cent. “The bank expects NIM to improve to about 3.10 per cent on the back of lower cost of deposits and improvement in international margins to about 1.20 per cent,” said Vijayalakshmi R. Iyer, Chairperson and Managing Director.
Net profit for FY13 nudged up three per cent to Rs 2,749 crore against Rs 2,677 crore in FY12.
Gross non-performing assets ratio increased to 2.99 per cent from 2.34 per cent in March quarter of FY12. For Bank of India, NPA levels have peaked, said Iyer.
Loan restructuring
The bank restructured loans worth Rs 2,159 crore in Q4 FY13. “Restructuring in the June quarter this fiscal is expected to be about Rs 515 crore. Going forward, stress in the loan portfolio will be lower,” Iyer said.
Against an exposure of Rs 650 crore to the beleaguered Kingfisher Airline, the bank has recovered Rs 53 crore through share sale in the recovery process.
Further, the bank will go for qualified institutional placement in the second half of FY14. “We will require capital worth about Rs 6,000 crore, of which, Rs 3,000 crore will be ploughed back from profits. Hence, about Rs 3,000 crore will be raised, including capital infusion from the Government,” Iyer added.
The board recommended a dividend of Rs 10 per share in FY13.
Bank of India’s scrip ended 4.35 per cent lower at Rs 324.25 per share on Bombay Stock Exchange.