State-run Bank of India is targeting bad loan recoveries worth Rs 12,000 crore in this financial year that began on April 1, its managing director and chief executive officer said on May 24.
“For the current financial year, in a baseline scenario, we are aiming (recoveries) at about Rs 12,000 crore,” Atanu Kumar Das told reporters at a press conference after January-March earnings.
“Out of this NCLT (National Company Law Tribunal) recoveries are expected to be around Rs 4,500 crore, NARCL (National Asset Reconstruction Company) will be around Rs 2,500 crore and the remaining will be through a normal recovery process.”
As far as exposure to the stressed Srei Group is concerned, the bank has "proactively" provided for 50 percent of its exposure, executive director Swarup Dasgupta said at the same conference. The bank has completely provided for its exposure to debt-laden Future Group, he added.
The state-run lender aims to bring down promoter Government of India’s stake to 75 percent from 81 percent currently, and plans to raise funds through a qualified institutional placement (QIP) of shares and follow-on public offer (FPO) for the same during the financial year, managing director Das said.
“We have taken an in-principal approval from the board to raise about Rs 2,500 crore for this financial year,” Das said. “We will be working out the modalities. But broadly it will be through QIP or FPO. Post the first quarter, we will be taking a call on that.”
Through a QIP, listed companies raise capital by issuing equities, or other equity convertible securities to qualified institutional buyers. A follow-on public offer is an issuance of additional shares made by a company after its initial public offering.
When asked if the bank will be concerned to lend to the steel sector following the government’s recent measures, ED Dasgupta said that a call to lend to companies will be taken on a “case-by-case basis.”
The government on May 21 had waived customs duty on the import of some raw materials, including coking coal and ferronickel, used by the steel industry. To improve availability, it hiked the duty on iron ore exports by up to 50 percent and a few steel intermediaries by 15 percent.
Q4 results:
In the January-March quarter, Bank of India reported a sharp annual jump in standalone net profit on the back of healthy growth in net interest income (NII) and a sharp decline in loan loss provisions. Net profit for the quarter stood at Rs 606 crore against Rs 250 crore in the year-ago quarter, according to a stock exchange filing.
NII, the difference between interest earned and interest expended, rose 35.77 percent to Rs 3,986 crore, up from Rs 2,936 crore in the same quarter of the previous financial year. Domestic Net Interest Margins (NIM) rose to 2.90 percent as on March-end, from 2.16 percent last year.
Provisions for non-performing assets (NPAs) declined to Rs 1,135 crore as on March-end, down from Rs 3,089 crore a year ago.
The gross NPA ratio improved to 9.98 percent, down from 13.77 percent in the year-ago quarter and 10.46 percent in the prior quarter. The net NPA ratio stood at 2.34 percent, down from 2.66 percent as on December end.
The bank’s slippage ratio was at 0.44 percent while credit cost stood at 1.10 percent as on March-end.
Bank of India guided that it expects credit growth to be around 10 percent to 12 percent for this financial year. Gross NPA ratio is expected to be lower than 8 percent, while NIMs are projected to be around 3 percent in this financial year. The credit cost is expected to be at 1 percent in FY23.
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