MUMBAI: State-owned Bank of India logged in a 10% year-on-year growth in net income at Rs 1,073 crore for the first quarter of the financial year 2024-25 (Q1FY25) despite robust loan sales but rising cost of funds offset this as new loans did not being in the desired margins.
The bank’s net interest income rose a low 6% to Rs 6,275 crore despite a robust growth in advances but this was offset by lower non-interest income which declined by 12% to Rs 1,302 crore while the net interest margin, which is the key measure of profitability of a bank, declined marginally to 3.07%.
Had it not been for the lower tax outgoers, the bank would have reported flat numbers as its provisions soared 57% to Rs 1,293 crore.
Bank of India’s provisions of increased 57% on a YoY basis and declined 29% sequentially in in the reporting quarter to Rs 1,293 crore as fresh slippages rose to Rs 2,973 crore, of which Rs 1,056 were from the MSME sector, Rs 588 crore from retail, and Rs 737 crore came in from the agriculture portfolio.
Corporate slippages stood at Rs 564 crore. However, overall asset quality of the bank improved, with gross non-performing assets ratio falling 36 bps to 4.62 and net NPA ratio falling 23 bps to 0.99. Provision coverage ratio improved to 92.11 as against 90.59.
The bank’s advances rose 15.82% to Rs 6 trillion and deposits rose 9.91% to 6.47 trillion.
Net interest margins fall as bank pay more for funds
Chairman Dinesh Kumar Khara told reporters that the net interest margins fell 12 bps to 3.35% as the bank has been paying more for its funds by way of fixed deposits. But he said that the bank will be able to maintain the margins at 3.2-3.4% range in the reminder of the fiscal