Shares of Bank of India were down around a percent on Wednesday as investors reacted to its financial performance for the June quarter.
The public sector lender reported first quarter profit growth at 8.4 percent year-on-year despite rising provisions and weakening asset quality, beating analyst expectations.
Analyst on an average had estimated the bank to report huge losses of more than Rs 1,000 crore on account of provisions.
Profit during the quarter increased to Rs 95.1 crore compared to Rs 87.7 crore in same period last fiscal. Strong growth net interest income and tax credit helped the bank report profit for the quarter but apart from higher provision, lower other income and operating income restricted profit growth.
Net interest income in Q1 grew by 32.4 percent to Rs 3,354.3 crore compared to Rs 2,533 crore in corresponding period last fiscal.
Asset quality weakened for the quarter ended June with gross non-performing assets (NPA) as a percentage of gross advances climbing to 16.66 percent versus 16.58 percent in the March quarter. Net NPAs, too, were higher at 8.45 percent against 8.26 percent sequentially.
Provisions for bad loans more than halved sequentially to Rs 2,564 crore from Rs 6,674 crore, but increased 14 percent year-on-year.
Brokerage house Credit Suisse has maintained an underperform rating on the stock and cut target to Rs 85 from Rs 103. Slippages remained elevated at 2% of loans, it said, adding that the loan book continued to contract led by decline in overseas book.
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