Banking sector losses in the March quarter near Rs 20,000 crore; BoI annaul loss at Rs 6,200 crore
Bank of India (BoI) on Tuesday posted a loss of Rs 3,587 crore for the quarter ended March 31, 2016, second-highest after Punjab National Bank, which had reported the highest ever loss in a single quarter for a bank at Rs 5,367 crore.
This takes the annual loss of BoI to Rs 6,200 crore coming mainly on account provisions of Rs 4,073 crore. The total loss of 15 public sector banks in fourth quarter so far is close to Rs 20,000 crore. The asset quality deteriorated with the Rs 13,500 crore fresh slippages during the quarter. The gross non-performing assets (NPAs) of the bank rose 38.9% over the preceeding quarter at Rs 49,879 crore. The total slippages during the year were Rs 27,500 crore, majority of which came from the infrastructure and other corporate loans of the bank. About Rs 10,000 crore of bad loans emanated from the asset quality review (AQR) of the RBI.
But the provision coverage ratio (PCR) of the bank during the quarter stood at 51.14% lower then the PCR of 54.50% it had in the year-ago period. With this, the total restructured loans and the NPAs of the bank stood at 15% of its total advances.
Mellwyn Rego, chairman and managing director, Bank of India, said, "We expect to see the asset quality challenge during this financial year also but it will be of far lower magnitude. We are on a consolidation exercise and we will proceed from here with cautious optimism." He said that in various other parameters like the net interest income (NII) the bank had posted encouraging numbers and is also keeping its cost of funds down by cutting down on bulk deposits. He said that the bank has created a war room for fighting the NPAs.
NII, the difference between the interest earned and interest expended, grew 11.9% to Rs 3,187 crore but other income of the bank declined 21% to Rs 883.6 crore over the year-ago period.
"We are looking forward to have one-time settlement (OTS) with the errant and stressed borrowers rather than sell our loans to the asset reconstruction companies. In 95% of the cases we have filed with the Sarfaesi (The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act), but the recovery through this route is only 6%," Rego told a media conference after announcing the results.
The operating profit of the bank increased marginally to Rs 1,464.2 crore, but the banks pruned its provision coverage ratio. During the quarter the bank had a tax writeback of Rs 419 crore as against a tax writeback of Rs 772.8. Bank of India stock price closed 0.25% lower at Rs 80.35 after a hitting 52 week low of Rs 79.15 on the BSE.
The bank plans to raise Rs 8,500 crore through a combination of equity and bonds during the financial year to expand its balance sheet.
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