Bank of India (BoI) reported a significant 63 per cent year-on-year (YoY) surge in net profit, reaching Rs 2,374 crore for the second quarter of FY25, driven by a robust 49 per cent rise in non-interest income. This performance was supported by treasury gains and higher recoveries, as disclosed in its quarterly results on Monday.
The Mumbai-based bank also showed an impressive 39.4 per cent sequential increase in profit from Rs 1,703 crore in Q1FY25. BoI’s shares closed up 0.63 per cent at Rs 112.25 on the BSE post-results announcement.
BoI’s net interest income (NII) saw a 4 per cent YoY increase to Rs 5,986 crore, compared to Rs 5,740 crore in the same period last year. However, the net interest margin (NIM) experienced a slight decline to 2.82 per cent from 3.08 per cent YoY and from 3.07 per cent in Q1FY25.
Commenting on this, Rajneesh Karnatak, Managing Director and CEO of BoI, noted that early repayments of corporate loans worth Rs 20,000 crore in July impacted NII and margins, but he expressed optimism about recovery in margins, forecasting a 2.9 per cent NIM by year-end as new disbursements pick up.
The bank’s non-interest income rose sharply to Rs 2,518 crore, with a substantial boost from investment sales and revaluation gains, which grew to Rs 730 crore from Rs 81 crore YoY. Recoveries from written-off accounts also saw a 22 per cent rise, reaching Rs 685 crore.
On asset quality, BoI showed improvement as gross NPAs declined to 4.41 per cent in September 2024 from 5.84 per cent a year prior, and net NPAs reduced from 1.54 per cent to 0.94 per cent. The provision coverage ratio (PCR) strengthened to 92.22 per cent from 89.58 per cent YoY. However, provisions for non-performing assets doubled to Rs 1,427 crore due to a large telecom public sector unit loan turning NPA.
Karnatak noted that BoI remains in discussions with the telecom PSU for resolution of the Rs 1,000 crore exposure, with additional provisions front-loaded for aging accounts.
In terms of growth, advances rose 14.51 per cent YoY to Rs 6.21 trillion, with retail advances up 21.61 per cent. BoI projects 14 per cent overall credit growth in FY25, supported by a Rs 70,000 crore pipeline across corporate, retail, agriculture, and MSME segments. Deposits grew by 10.15 per cent to Rs 7.75 trillion, though the share of low-cost CASA deposits declined to 41.18 per cent.
The bank plans to achieve a 13 per cent deposit growth target for FY25 and will raise Rs 5,000 crore via infrastructure bonds. BoI’s capital adequacy stands at 16.63 per cent, with plans to issue Rs 2,500 crore in Tier-I bonds, while no equity capital raises are planned, Karnatak added.
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