Backed by a strong growth in its net interest income, Bank of India on Saturday posted a 24.14 per cent rise in its net profit at Rs. 725.13 crore for the quarter ended June 30, 2010, although its bad loans went up substantially year-on-year. The state-owned lender had reported a net profit of Rs. 584 crore in the same period a year ago.
Net interest income improved by 34 per cent to Rs. 1,740 crore from Rs. 1,301 crore. It witnessed a sharp rise in its slippages in the June quarter with the net non-performing assets (NPAs) escalating to 1.18 per cent from 0.84 per cent during the same period last year.
“Going forward, we expect to further reduce our NPAs from the current levels. In the first quarter, our recoveries have been better than slippages. You have to upgrade accounts and have a dialogue with the clients,” bank Chairman and Managing Director Alok Misra told reporters here.
During the quarter, the bank recovered Rs. 691-crore bad loans while the additional slippages stood at Rs. 618 crore. The bank's loan book grew to Rs. 1.77 lakh crore, up 20 per cent, from Rs. 1.48 lakh crore. Moving ahead, the bank would focus on sectors such as auto, housing and education and had targeted a full-year growth of 21-22 per cent in advances on the back of a pick-up in demand from sectors like mid-corporate, small and medium enterprises (SME) and retail, Mr. Misra said, adding that the SME book was likely to grow to 25 per cent by the end of the fiscal. Deposits jumped to Rs. 2.34 lakh crore, up 20 per cent from Rs. 1.95 lakh crore. The proportion of current and savings account (CASA) deposits to total deposits improved to 33 per cent. CASA deposits grew 27 per cent to Rs. 64,900 crore from Rs. 51,333 crore. The net interest margin was up 0.47 per cent to 2.89 per cent.
The public sector lender witnessed a 5.64 per cent fall in its non-interest income, mainly on account of a steep 58.33 per cent decline over the last year in profit from sale of investments to Rs. 100 crore from Rs. 240 crore in the year-ago period. Its exposure to the infrastructure grew 75 per cent to Rs. 19,088 crore, he said. The bank, which operates in 18 countries, now derives around 16 per cent of revenues from international operations. It plans to launch branches in New Zealand, Canada, Uganda and Botswana in the current fiscal besides upgrading the operations of its branch in Johannesburg, he said.
The bank had targeted to hire over 5,000 employees this year given that nearly 8 per cent of its staff was set to retire by 2012, Mr. Misra said.