JOIN USIn perhaps its worst ever performance in a decade, state-owned Bank of India (BoI) reported a net loss of Rs 56.14 crore as against a profit of Rs 557.51 crore in the same quarter of the previous fiscal.
The dismal performance was mainly on account of higher provisioning for non-performing assets (NPAs). During the quarter, the bank’s provisions increased 45.77 per cent to Rs 2,255.49 crore as against Rs 1,547.27 crore in the same quarter of the previous fiscal.
Net interest income for the bank also decreased to Rs 2,846.29 crore in the fourth quarter as against Rs 3,047.31 crore in the same quarter of the previous fiscal. Shares of the bank tumbled over six per cent after its performance disappointed analysts as well as investors.
Asset quality for the bank witnessed a sharp deterioration during the quarter. While gross NPAs stood 5.39 per cent as against 4.07 per cent in the sequential quarter and 3.15 per cent in the comparable quarter last year, net NPAs stood at 3.36 per cent compared with 2.5 per cent in the sequential quarter and 2 per cent in the comparable quarter last year.
Savings deposits for the bank increased 10.62 per cent from Rs 87,136 crore in March 2014 to Rs 96,389 crore in March 2015. Current deposits, however, declined 1.82 per cent from Rs 18,331 crore in March 2014 to Rs 17,997 crore in March 2015. The management sounded confident that better days are ahead for the bank with the corrective actions taken by them so far.
“The significant rise in NPAs should be curtailed going forward in the coming quarter as atleast around Rs 3,500 crore of upgradation is likely in Q1 of FY16,” BoI CMD V R Iyer said.
As far as the guidance is concerned, the management painted a positive picture as well for the bank.
“We expect gross NPAs to be around 4.5 per cent and net NPAs to be around 2.75 per cent. As far as net interest margins are concerned, we expect it to be around 2.6 per cent driven by lowering cost of deposits and improvement in fee income,” Iyer said.
BoI to sell stake in life insurance JV
Bank of India said it is looking at selling 18 per cent stake in the three-way life insurance arm, Star-Union Dai-ichi Life Insurance, to the Japanese partner to bring down its share to 30 per cent. Star Union Dai-ichi Life is a joint venture between Bank of India (48 per cent), Union Bank of India (26 per cent) and Japanese life insurer Dai-ichi Life (26 per cent). “We will bring down our stake from 48 per cent to 30 per cent. The valuation process is in progress,” said BoI chairperson and Managing Director V R Iyer.
DH News Service