Core income growth,asset quality lift BoI net 155% to Rs 243cr

State-run Bank of India Tuesday reported a 155 percent rise in net income at Rs 243 crore in the quarter to June, aided by an increase in interest income and better asset quality. For the reporting quarter, the bank saw the net interest income rise to Rs 3,485 crore from Rs 3,354 crore.

"The rise in profit was driven by higher net interest income and also due to increase in other income," executive director N Damodharan told reporters. Global margin improved to 2.67 percent from 2.49 percent, but domestic margin inched down to 3.03 percent from 3.05 percent, he said, adding the bank is targeting the global NIM to move beyond 3 percent in the current fiscal.

The bottomline was also boosted by better asset quality as the gross NPA ratio improved a tad to 16.50 percent or Rs 62,068 crore from 16.66 percent or Rs 60,604 crore and the net NPA ratio massively improved to 5.79 percent or Rs 19,288 crore as against 8.45 per cent or Rs 27,932 crore. "We will continue our drive for recoveries/resolution of NPAs and containing slippages. Net NPAs will be contained below 6 percent in FY20," he said.

Fresh slippages stood at Rs 3,683 crore during the period but recoveries slowed to Rs 1,052 crore from Rs 2,699 crore in the year-ago period. Damodharan said the bank expects recoveries to improve in the second and third quarter as it expects some large NCLT accounts to be settled and also gains from the just introduced one-time settlement scheme.

The bank's exposures to NCLT accounts are worth Rs 31,188 crore, including those in the two Reserve Bank lists containing the largest stressed accounts. The bank has an exposure of around Rs 4,000 crore each to mortgage lenders DHFL and Indiabulls Housing Finance.

After PNB reported fraud of over Rs 3,805 crore at Bhushal Power & Steel, BoI started ordered forensic audit of all the accounts worth Rs 50 crore and above, he said. On fund raising, he said they are looking to raise Rs 3,500 crore through various instruments. "We have a board approval to raise Rs 3,500 crore which will be done after the second quarter as first priority is to show sustainability of our earnings so that the market sentiment improves," he said.

The bank also plans to raise close to Rs 1,000 crore through sale of its stake in STCI Finance and Equifax. In FY19, the bank closed/merged 36 domestic branches and shuttered 1,269 ATMs, while it also closed three international branches, and so far this year a branch and a representative office have already been shuttered.

"Rationalisation/merger drive of branches and ATMs will continue through the rest of FY20," another executive director AK Das said. Domestic advances increased 11.15 percent to Rs 3,24,198. From the deposits side, the low-cost Casa amount increased to Rs 1,80,187 crore from Rs 1,69,916 crore.

The BoI counter plunged 6.54 percent to Rs 70.70 on BSE against the benchmark plunging over 0.8 percent..