Bank of India reported an 18.68% year-on-year rise in net profit for the September quarter, supported by a 19% growth in net interest income. While asset quality improved significantly with the gross NPA ratio falling to 1.60%, investors should note the rise in fresh loan slippages in the agriculture and MSME segments, alongside a slight dip in the CASA ratio.
Bank of India reported a strong performance for the second quarter of the current fiscal year, with net profit rising by nearly 19% to reach Rs 3,202 crore. This growth was largely driven by a healthy 19% increase in global net interest income, which totaled Rs 7,007 crore for the quarter. While the bank saw interest income on its loans grow by 20%, it also had to manage a 14% rise in interest expenses, mainly due to higher payouts required on customer deposits.
Asset Quality and Loan Book Performance
The bank showed a clear improvement in the quality of its loan book. The gross non-performing asset (NPA) ratio, which measures the percentage of bad loans, dropped to 1.60% compared to 2.54% in the same period last year. The total value of gross bad loans decreased to Rs 13,648 crore from Rs 18,014 crore a year ago. Despite this, investors may note that fresh loan slippages reached Rs 1,201 crore, with the agriculture and MSME (Micro, Small, and Medium Enterprises) sectors being the primary contributors to this new bad debt.
Growth and Deposit Trends
Credit growth remained robust, with domestic advances rising nearly 18% to Rs 7.04 trillion. The bank is focusing heavily on the RAM (Retail, Agriculture, and MSME) segment, which now makes up over 58% of its gross domestic advances. Mortgage lending was a major growth driver, posting a 33% increase compared to the previous year. While total deposit growth remained strong at Rs 10.38 trillion, the bank saw its CASA ratio (Current Account and Savings Account) dip to 34.16%. This decline is a common industry trend, as many customers are shifting their money from savings accounts into higher-interest term deposits to earn better returns.
Margins and Future Outlook
The global net interest margin, a key metric for bank profitability, stood at 2.47%. While this is an improvement on an annual basis, it marked a slight decline from the 2.52% recorded in the June quarter, highlighting the ongoing pressure from rising deposit costs. The bank ended the quarter with a solid capital adequacy ratio of 17.78%, which provides a stable cushion for future business expansion. Going forward, investors will be closely monitoring how the bank manages fresh slippages in its agricultural and MSME portfolios, and whether it can stabilize its interest margins amid stiff competition for customer deposits.