BoI net falls 45, to pay less

MUMBAI, JUNE 17: Bank of India BoI has reported a massive 45 per cent decline in its net profit at Rs 201 crore for the fiscal 1998-99 ...

MUMBAI, JUNE 17: Bank of India BoI has reported a massive 45 per cent decline in its net profit at Rs 201 crore for the fiscal 1998-99 as compared to Rs 364 crore reported in the previous fiscal. The bank has decided to prune its dividend to 10 per cent from 20 per cent of last year.

During the fiscal, the gross NPAs of the bank shot up 13 per cent to Rs 3,010 crore as compared to last year8217;s Rs 2669 crore. Assets amounting to Rs 1,013 crore turned NPAs during 1998-99. The net non performing assets NPA of the bank rose to Rs 1,770 crore 7.29 per cent of advances in 1998-99 from Rs 1,582 crore 7.34 per cent in the previous year.

However, the BoI scrip ended with a gain at Rs 21.75 on the BSE as compared to Wednesday8217;s closing of Rs 21.60 as entire the stock markets witnessed frantic FII buying. The operating profit of the bank increased marginally to Rs 705 crore during the year from Rs 697 crore in the previous year.

Addressing a news conference, BoI chairman and managing director S Rajagopalsaid that the fall in the net profit is due to the excess provisioning made on account of rising non-performing assets NPAs and Rs 50 crore provisioning made on account of arrears of wage revision of the employees. 8220;Besides, Rs 32 crore has provided for double square plus8217; scheme of the BoI Mutual Fund to bridge the gap between its net asset value NAV and the assured return,8221; he said.

The double square plus8217; scheme which is currently facing a huge deficit will come up for redemption in the fiscal 2000. The bank is planning to stagger out the provisioning requirement over three accounting years.

Rajagopal said that textiles, steel, engineering and cement sectors primarily contributed to the rise in NPAs in 1998-99. 8220;The bank has taken a policy decision not to increase exposure to sugar and steel sectors,8221; he said, adding the bank was planning to diversify its assets portfolio to include petrochemicals, pharmaceuticals and information technology.

Advances of the bank were up by 10.48 per cent toRs 24,327 crore and deposits were up by 12.94 per cent to Rs 44,430 crore. Giving the recovery break up figures, Rajagopal said the bank had made cash recovery of Rs 262 crore, upgraded assets worth Rs 115 crore and written-off assets amounting to Rs 300 crore.

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Staff cost had gone up by Rs 154 crore to Rs 994 crore from Rs 770 crore as on March 31, 1999, Rajagopal said adding that this was due to Rs 42 crore provisioning made for arrears payment. The capital adequacy ratio CAR as on March 31, 1999 was 10.55 per cent as compared to 9.11 per cent last March-end. The bank raised Rs 500 crore last year to boost its Tier II capital and this helped to increase the CAR, he said.

On the bank8217;s business plan for 1998-2000, he said that it has envisaged a growth of over 17 per cent in deposit growth and around 20.4 per cent growth in advances. The bank is also planning to launch Visa cards. He said the NPA has been targeted to be brought down to below five per cent and the gross profit has been projected at Rs1,000 crore. He said BoI was mulling over the idea of coming out with floating rate deposits this year.