Bank of India reports ₹252 crore profit as provisioning for bad loans declines

Gross NPAs fall consistently; lender’s first earnings post PCA rollback

State-run lender Bank of India reported a net profit of ₹252 crore for the quarter ended March 31, compared with a loss of ₹3,969 crore during the same period of the previous year.

This, after provisioning for bad loans declined sharply to ₹1,502 crore during the reporting period, from ₹6,699 crore a year earlier. “Gross NPAs [have] declined consistently since September 2018,” the bank said.

The Gross NPA ratio improved from 16.58% in March 2018 to 15.84% in March 2019. Net NPA ratio declined from 8.26% to 5.61%. Provision coverage ratio improved from 65.85% in March 2018 to 76.95% in March 2019.

These are the bank’s first earnings announcement after restrictions under prompt corrective action were withdrawn by the RBI in January. Net interest income, the difference between interest earned and interest expanded, rose 57.72% to ₹4,044 crore in Q4 FY19 on account of both a rise in the yield on advances and a drop in cost of deposits.

Net interest margin

As a result, the overall net interest margin increased from 1.65% to 2.93% in Q4 FY19, a rise of 128 basis points (bps). Net interest margin from domestic operations went up substantially from 1.92% to 3.38%, an increase of 146 bps. Non-interest income increased by 16.58% to ₹1,603 crore in March 2019, supported by profit from sale of investments and recovery in written-off accounts.

Domestic loans grew by 11.8% on the back of an 18.14% growth in retail advances.

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