Bank of India to raise $500 million by way of medium-notes this quarter

Bank of India (BoI) is planning to raise $500 million (about Rs2,275 crore) by way of medium-term notes (MTN), an official of the bank, who did not wish to be named, told DNA.

The official also said that the tenure of these notes will be between five and ten years.

Chairman and managing director Alok Kumar Misra said the bank is waiting for the right opportunity to raise money through the notes, and it would be done in the current quarter itself.

Misra did not disclose the exact amount that would be raised.

“We will have to look into our financial books and decide on that,” he said.

MTN is a form of debt and it is used by banks to ensure constant cash flows which allow them to tailor debt issuances to meet the financing needs of overseas branches.

Of its overall $2 billion MTN programme launched in 2005, Bank of India has already raised $1 billion.

Last March, the bank had raised $500 million by way of MTN at an interest rate of 4.75%. At that time, the bonds were swapped into a floating rate of 175 basis points above Libor.

On Friday, the bank also declared its third quarter (October-December 2010) results. Net profit stood at Rs653 crore, a growth of 60.80%  year on year.

For the first nine months of the current fiscal, the bank’s net profit grew 51.92% to Rs1,995.07 crore.
The net interest income rose to Rs1,987 crore from Rs1,495 crore in the third quarter of the previous fiscal.

And the net interest margin of the bank improved to 3.09% for third quarter from 2.60% in the corresponding quarter of the previous year.

Current account savings account deposits (Casa) rose by 22.17% to Rs69,287 crore as of December 31, 2010, compared with Rs56,714 crore in the previous year. The Casa percentage stood at 32.49%.