Bank of India Q1 net profit jumps 32 pc to Rs 2 252 cr on treasury gains

     Mumbai, Jul 29 (PTI) State-owned Bank of India on Tuesday reported a 32 per cent jump in its net profit at Rs 2,252 crore in June quarter, helped by gains from the treasury front.
     The bank's core net interest income declined by 3 per cent to Rs 6,068 crore even though the global advances increased by 12 per cent, but restricted by a 0.52 per cent compression in the net interest margin to 2.55 per cent.
     Its managing director and chief executive Rajneesh Karnatak said NIMs have bottomed-out, but declined to share a target for the remainder of the fiscal year on the crucial number which is under pressure for lenders across the banking system as the RBI goes about with its rate cuts.
     Admitting that NIMs will be under pressure in Q2 as well, Karnatak said BoI does not expect any more rate cuts by the RBI, and the deposit repricing with the passage of time will help the bank on this front.
     He said that with 15 per cent of the loan book being in foreign branches, the lower margin of 1.2 per cent on the international book also pulls down the blended NIMs for the lender.
     The non-interest income grew 66 per cent to Rs 2,166 crore during the reporting quarter, primarily driven by profit on sale of investments or treasury gains, which were up 393 per cent to Rs 820 crore.
     Karnatak said going forward, the setting in of the busy loan season, coupled with the NIM improvements, will help the bank post profit growth going ahead even when the treasury gains.
     On the loan growth front, retail segment drove the advances with nearly 20 per cent and the bank management pointed to the performance continuing during the remainder of the year.
     However, corporate loan slowed down to just 4 per cent, which was attributed to pricing pressures. Karnatak explained that the bank had to move away from seven accounts because of pricing troubles.
     The bank has a loan pipeline of Rs 80,000 crore, including up to Rs 70,000 crore of corporate loans across various sectors, which will help it achieve the 12-13 per cent overall loan growth target for FY26, the MD said, adding the bank is aiming for deposit growth to accelerate to over 11 per cent from the present 9 per cent.
     The bank's fresh slippages increased to Rs 2,080 crore, and the management guided towards reducing the elevated number. The gross non-performing assets ratio reduced to 2.92 per cent as against 3.27 per cent in the quarter-ago period.
     Provisions for NPAs decreased by 9 per cent to Rs 1,104 crore during the quarter.
     Without naming the state-run MTNL, Karnatak said deliberations on finding a resolution to a stressed telco are in advanced stages and a solution will be found in 3-6 months.
     The bank's overall capital adequacy stood at 17.39 per cent as of June 30, with the core buffer at 15.15 per cent, and Karnatak said it has no plans of raising any fresh capital.
     The Bank of India scrip closed 0.58 per cent up at Rs 112.15 apiece on the BSE on Tuesday, as against gains of 0.55 per cent on the benchmark.

(This story has not been edited by THE WEEK and is auto-generated from PTI)