Bank of India posts ₹1,156 crore loss in Q2 on surging NPAs

Provisions and contingencies that Bank of India set aside for NPAs surged 71% to ₹ 3,343.27 crore in the September quarter from ₹1,953.30 crore a year ago. Photo: Pradeep Gaur/Mint

Bank of India (BoI) on Monday reported losses of ₹1,156.25 crore for the September quarter as bad loans continued to mount and provisions soared. The bank was expecting to recover ₹1,800 crore from the NCLT (National Company Law Tribunal) accounts this quarter, but the resolution process was delayed. The bank had reported profit of ₹179.07 crore in the year-ago period.

According to estimates of six analysts polled by Bloomberg, Bank of India was expected to post loss of ₹456.30 crore.

Its asset quality deteriorated as gross non-performing assets (NPAs) rose 24.85% to ₹61,560.65 crore in September quarter from ₹49,306.90 crore in the corresponding quarter of last year.

As a percentage of total loans, gross NPAs rose to 16.36% as compared with 12.62% in the year-ago quarter, while net NPAs were at 7.64% against 6.47%. The bank added bad loans worth ₹2,624 crore during the quarter.

The management expects to bring down the net NPA below 6% before the end of this financial year. “We expect to recover around ₹2,000 crore from resolution of accounts under NCLT in the third quarter,” said Dinabandhu Mohapatra, managing director and chief executive officer, Bank of India.

Provisions and contingencies surged 71% to ₹ 3,343.27 crore in the quarter from ₹1,953.30 crore a year ago. On a quarter-on-quarter basis, it rose 30% from ₹2,564.19 crore. Other income fell 40% to ₹1,030.42 crore.

The management said that the bank has an exposure of ₹3,400 crore to the entire Infrastructure Leasing and finance Service (IL&FS) group, which includes ₹345 crore of exposure to the holding company.

On the operations front, the bank’s net interest income (NII), or the core income a bank earns by giving loans, was up marginally by 0.6% to ₹2,926.79 crore versus ₹2,908.24 crore last year.

Advances for the quarter fell 6.6% to ₹3.40 trillion, while deposits declined 5.8% to ₹5.12 trillion.

On Monday, Bank of India shares fell 4.85% to ₹87.25 on the BSE while the benchmark Sensex shed 1% to end the day at 34,812.99 points. The results were declared after market hours.