Beena Parmar Moneycontrol News
Bank of India expects to return to profit in the third quarter of the current fiscal after a loss in the second quarter.
The public sector lender posted a loss of Rs 1,156 crore on November 12 as it set aside higher provisions for bad loans.
It had reported a net profit of Rs 179 crore in the September quarter last year.
"We should come back to profit in Q3...We expect to reduce our net NPA (non-performing asset) ratio below 6 percent by the end of this quarter (Q3)," said Dinabandhu Mohapatra, CEO and MD of Bank of India.
Hopeful of large corporate recoveries worth about Rs 2,000 crore from the accounts under insolvency, Mohapatra is also banking on recovery from assets put up on sale and one-time settlement of NPAs.
In the quarter, it has recovered about a total of Rs 600 crore through the two mechanisms. Total recovery stood at nearly Rs 2,700 crore.
In Q2, the bank put up a total of Rs 10,000 crore worth of NPAs on sale through auction.
We are negotiating resolutions for power assets worth Rs 3,000 crore, Mohapatra added.
IL&FS loans
Banks of India has a total exposure of Rs 3,400 crore to Infrastructure Leasing and Financial Services (IL&FS) as a group.
Mohapatra said there is no concern about the bank's loans to the debt-laden infrastructure conglomerate and also to other non-banking financial companies (NBFCs), where exposure stands at about Rs 25,000 crore.
Asset quality
During the quarter, provisions for bad loans jumped 51.5 percent to Rs 2,828 crore, while total provisions surged 71 percent to Rs 3,343 crore.
However, asset quality improved slightly from the previous quarter, with gross bad loans as a percentage of total loans standing at 16.36 percent at end-September, compared with 16.66 percent at end-June. This was still higher than 12.62 percent a year ago.
Mohapatra said the bank's focus on reducing risk-weighted assets and credit to RAM (retail, agriculture and medium sector enterprises) will aid growth and improvement in its overall business growth.
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