BoI Q1 net falls 16% on lower other income, high provision

Public sector lender  Bank of India  reported a 16.4 percent decline (lower-than-expected) in net profit at Rs 805.7 crore in April-June quarter impacted by lower growth in net interest income, fall in other income and higher provision by supported by lower tax cost. 


Net profit in the year-ago period was Rs 964.2 crore. The street had expected bottomline of the bank at Rs 701 crore for the quarter. 


Net interest income, the difference between interest earned and interest expended, grew 5.9 percent on yearly basis to Rs 2,686.5 crore in the quarter ended June 2014, which was significantly lower than analysts' forecast of Rs 3,070.6 crore.



 During the quarter, other income (non-interest income) dropped 13 percent year-on-year to Rs 1,024.5 crore and operating expenses jumped 7.4 percent to Rs 1,650.7 crore while tax expenses slipped 30.7 percent at Rs 361.54 crore compared to the year-ago period. 



Asset quality worsened in June quarter with the gross non-performing assets (NPA) rising 24 basis points year-on-year (up 13 bps sequentially) to 3.28 percent and net NPA increasing by 4 bps Y-o-Y (up 14 bps Q-o-Q) to 2.14 percent. In absolute terms, gross NPA of the bank jumped 33 percent (up 5.6 percent Q-o-Q) at Rs 12,532 crore in first quarter of current financial year 2014-15 compared to same quarter last year while net NPA grew 25.5 percent (up 8.4 percent Q-o-Q) to Rs 8,041 crore during the same period.





 Provisions during the quarter stood at Rs 893 crore, up 28.7 percent compared Rs 694 crore in the year-ago period but down 42.3 percent compared to Rs 1,547 crore in previous quarter. Provision coverage ratio was 58.10 percent at the end of June 2014.