Bank of India posted 9 per cent growth in first quarter net profit, aided by a higher net interest income and robust retail loan offtake.
In the quarter ended June 30, 2013, the net profit increased to Rs 964 crore from Rs 887 crore a year ago.
Net interest income, the difference between interest earned and interest paid, rose 24 per cent to Rs 2,537 crore. The net interest margin improved to 2.5 per cent in the April-June period, from 2.27 per cent, a year ago and from 2.46 per cent in the preceding similar quarter.
Retail credit for the bank was up 16.5 per cent to Rs 22,972 crore. Micro, small and medium enterprises and agriculture contributed about 28 per cent and 20 per cent to overall domestic loan growth, respectively.
Retail focus
V.R. Iyer, Chairperson and Managing Director, Bank of India, said: “The bank will continue to focus on extending more retail credit. Deposits will grow by 18 per cent and advances by 16 per cent for the full year.”
However, the profit margin was capped by the higher provisioning made to cover rising bad loans.
Total non-performing loans for the bank shot up 39 per cent to Rs 9,413 crore (Rs 6,752 crore a year ago). Textiles, steel and metals contributed the lion’s share to the Rs 1,986 crore of loans slipping into NPA during the quarter.
Terming the RBI’s liquidity tightening measures as temporary, Iyer said: “As of now, the question of raising deposit or lending rates does not arise. We will closely watch the (liquidity and interest rate) movements.”
Capital raising plans
Iyer said the bank, after taking into account profit plough-back in the second quarter and the government’s equity contribution, will raise about Rs 2,000 crore in the second half of the year. It will do so through qualified institutional placements, bond offers, among other options.
Shares of the Mumbai-based bank, closed at Rs 183.50, down 4.55 per cent on the Bombay Stock Exchange.