Tag: net interest income

Bank of India standalone net profit almost doubles to ₹1,051 cr in Q2

Banking & Finance

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Bank of India’s standalone net profit almost doubled to ₹1,051 crore in the second quarter against ₹526 crore in the year ago period on the back of robust growth in other income and a steep decline in loan loss provisions.

During the reporting quarter, there was a reduction in gross non-performing assets (GNPAs) aggregating ₹5,771.50 crore.

NPA position of Indian Banks indicates gradual improvement: CARE Ratings

The Mumbai-headquartered public sector bank’s net interest income (difference between interest earned and interest expended) declined 14 per cent year-on-year (yoy) to ₹3,523 crore (₹4,113 crore in the year ago quarter).

Other income, including profit/loss on sale of assets, profit/loss on revaluation of investments (net), earnings from foreign exchange and derivative transactions, recoveries from accounts previously written off, dividend income, etc., jumped 59 per cent yoy to ₹2,136 crore (₹1,346 crore).

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GNPA position improved to 12 per cent of gross advances as at September-end 2021 against 13.51 per cent in the preceding quarter.

NPA position

Net NPAs position too improved to 2.79 per cent of net advances against 3.35 per cent in the preceding quarter.

Total deposits edged up by about one per cent yoy to ₹6,12,961 crore. Total advances were up about 5 per cent yoy to ₹3,78,727 crore.

On a consolidated basis, including the results of four domestic subsidiaries, four overseas subsidiaries, one joint venture and six associates, BoI reported a 97 per cent jump in net profit at ₹1,073 crore (₹543 crore).

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BoI Q1 net profit declines 15% y-o-y to ₹720 crore

Banking & Finance

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Bank of India (BoI) reported a 15 per cent year-on-year (yoy) decline in standalone net profit at ₹720 crore in the first quarter ended June 30, 2021, due to a decline in net interest income and a rise in provisions towards bad, doubtful and standard assets. The public sector bank had reported a standalone net profit of ₹844 crore in the year-ago quarter. The net profit in the reporting quarter, however, soared about three times vis-a-vis the fourth quarter’s ₹250 crore.

Net interest income falls

Net interest income (difference between interest earned and interest expended) declined about 10 per cent yoy to ₹3,144 crore (₹3,481 crore in the year-ago quarter). Total non-interest income (comprising income from commission, exchange & brokerage, profit from the sale of investments, profit from exchange transactions, recovery in written-off accounts, and other non-interest income) rose 39 per cent yoy to ₹2,377 crore (₹1,707 crore).

Within total non-interest income, profit from exchange transactions jumped 126 per cent yoy to ₹754 crore (₹333 crore), recovery in written-off accounts soared 477 per cent yoy to ₹173 crore (₹30 crore).

Also read: Bank of India posts Q4 profit of ₹250 crore

MD & CEO Atanu Kumar Das said total non-interest income includes a one-time inflow of ₹406 crore received on account of redemption of security receipts of an aviation account. Das observed that BoI will see an overall credit growth of 6-7 per cent in FY22, with the retail, agriculture, and MSME (RAM) segment expected to grow by about 14 per cent and corporate advances by about 5-6 per cent. Fresh slippages at ₹3,942 crore during the reporting quarter were lower vis-a-vis ₹7,368 crore in the fourth quarter (Q4) FY21 but substantially higher than year-ago quarter’s ₹402 crore. Slippages from the micro, small and medium enterprise (MSME) sectors accounted for 41 per cent of the total quarterly slippages, followed by agriculture (25 per cent), retail (16 per cent), corporate & others (10 per cent), and overseas (8 per cent).

PR Rajagopal, Executive Director, said the second Covid wave had a significant impact on retail and MSME borrowers. But collection efficiency in the retail segment is now at about 92 per cent. The Bank, which restructured loans aggregating ₹5,963 crore under RBI’s resolution framework 1.0 for Covid-related stress and ₹5,299 crore under the resolution framework 2.0, expects to recast about ₹5,000 crore more loans in the rest of FY22, he added.

Provisions towards bad and doubtful, and standard assets together were up 16 per cent yoy at ₹1,771 crore (₹1,526 crore).

Gross non-performing assets (GNPAs) level improved to 13.51 per cent of gross advances as at June-end 2021 against 13.91 per cent as at June-end 2020.

Net NPA level too improved to 3.35 per cent of net advances against 3.58 per cent.

Global deposits were up about 5 per cent yoy to ₹6,23,385 crore, with current account, savings account (CASA) deposits rising to 43.22 per cent of domestic deposits against 40.60 per cent in the year-ago period.

Global advances declined a shade (about 0.18 per cent yoy) to ₹4,14,697 crore, with domestic advances nudging up 1.65 per cent yoy and overseas advances declining 12 per cent yoy.

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Net profit rises 32% YoY to Rs 1,642 cr; asset quality weakens, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: Kotak Mahindra Bank today reported a 32 per cent year-on-year rise in its net profit to Rs 1,641.9 crore for the quarter ended June, which was below analysts’ expectations.

The private sector lender reported net interest income growth of 6 per cent on-year to Rs 3,942 crore, which was also below analysts’ estimates.

Provisions and contingencies in the quarter declined to Rs 935 crore from Rs 962 crore in the year-ago quarter. However, the lender saw a deterioration in asset quality in the reported quarter.

Kotak Bank’s gross non-performing loans ratio stood at 3.56 per cent in the reported quarter as against 3.25 per cent at the end of the March quarter. Similarly, the net NPA ratio expanded to 1.28 per cent from 1.21 per cent in the previous quarter.


The private sector bank’s net profit in the quarter was largely boosted by a sharp uptick in other income. Other income in the reported quarter jumped to Rs 1,583.03 crore from Rs 773.5 crore in the year-ago quarter.

Covid-related provisions as on June 30 were maintained at Rs 1,279 crore. In accordance with the Resolution Framework for Covid-19 and MSME announced by the RBI, the bank implemented total restructuring of Rs 552 crore as on June 30, Kotak Bank said.


In terms of loan growth, the quarter was tepid for the bank affected by the second wave as well as its conservative approach. Advances in the quarter grew merely 6 per cent on-year, which was lower than many of its peers.

At the same time, the current account-to-savings account ratio of the lender further improved to 60.2 per cent at the end of the June quarter from 56.7 per cent a year ago.

Kotak Bank’s operating performance was sturdy as operating profit jumped 19 per cent year-on-year to Rs 3,121 crore in the reported quarter.



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PAT surges 355% YoY to Rs 207 cr, highest in 10 quarters, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: YES Bank today reported a 355.2 per cent year-on-year rise in its net profit to Rs 207 crore for the quarter ended June, the highest quarterly profit since December 2018. Analysts had expected the lender to report a net loss.

The strong bottomline performance of the lender was aided by a 41 per cent on-year fall in provisions during the reported quarter.

The lender’s net interest income in the quarter slumped 26.5 per cent year-on-year to Rs 1,402 crore, which was below Street’s expectations.

YES Bank’s gross non-performing loans ratio rose to 15.6 per cent in the June quarter from 15.41 per cent in the previous quarter. However, net NPA ratio declined sequentially to 5.78 per cent. YES Bank’s provision coverage ratio also saw a sequential improvement to 79.3 per cent in the quarter.

Gross non-performing loans in the quarter stood at Rs 28,506 crore, which was slightly lower than the previous quarter. Cash recoveries continued to show positive momentum at Rs 602 crore in the quarter.

While the overall advances fell 1 per cent in the June quarter, the lender reported 23 per cent growth in its retail and small businesses loan book that was above its full-year guidance of 20 per cent. The current account-savings account ratio improved to 27.4 per cent and remained on-track to meet the lender’s guidance of more than 30 per cent in 2021-22.

YES Bank’s operating performance in the quarter was disappointing as operating profit sank 20 per cent on-year to Rs 920 crore, which was the highest in several quarters. The net interest margin in the quarter was at 2.1 per cent as against 3 per cent in the year-ago quarter.

Shares of YES Bank ended 0.8 per cent higher at Rs 13.1 on the National Stock Exchange.



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Net profit soars 190% to Rs 876 cr, beats estimates; firm to pay Rs 5 dividend, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: IndusInd Bank today reported a 190 per cent year-on-year rise in its net profit for the quarter ended March to Rs 876 crore, which was above analysts’ estimates.

The lender reported a net interest income of Rs 3,534.6 crore for the reported quarter, which was also higher than analysts’ estimates of Rs 3,476 crore.

The lender’s asset quality in the quarter, however, deteriorated on a sequential basis. The bank reported gross non-performing assets ratio of 2.67 per cent as against 1.74 per cent in the previous quarter.

IndusInd Bank’s net non-performing assets ratio stood at 0.69 per cent at the end of the March quarter as against 0.22 per cent in the previous quarter.

The bank said that its board has approved a final dividend of Rs 5 per share.

The lender’s bottomline was boosted by a 23.5 per cent year-on-year fall in provisions and contingencies during the quarter to Rs 1,865 crore.

IndusInd Bank said that it has made provisions of Rs 2,208 crore till March 31 on account of the Covid-19 pandemic and the high uncertainty created by the second wave.

Shares of IndusInd Bank ended 0.5 per cent lower at Rs 934.95 on the National Stock Exchange.



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Analysts expect high slippages in banks’ Q4 results after SC verdict

Banking & Finance

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Reported slippages would be elevated, KIE said, but banks were not expected to report a worrying ratio, given the improvement seen in economic recovery in recent quarters.

As banks report their first set of quarterly earnings after the Supreme Court vacated an interim stay on the recognition of fresh bad loans, slippages could be elevated in Q4FY21, analysts said. Lenders could also reverse some amount of interest income, which could get reflected in their net interest income (NII) numbers. Kotak Institutional Equities (KIE) expects NII growth to be 18% year on year (YoY) for banks. “On the net interest income line, we see a higher level of one-off income recognition (due to NPL recovery) and income de-recognition (slippages recognised in this quarter on a cumulative basis for lenders who have not done it previously),” the brokerage said, adding that treasury income would be lower, too.

Reported slippages would be elevated, KIE said, but banks were not expected to report a worrying ratio, given the improvement seen in economic recovery in recent quarters. “We expect overall NPL (non-performing loan) ratios to remain significantly lower than RBI projections, considering that we have seen significant recovery of bad loans from a few companies (steel and infrastructure),” KIE said. Reported write-offs could be high as well.

Loan losses in the banking sector, as measured by the gross non-performing asset (GNPA) ratio could nearly double to 13.5% by September in a baseline scenario, and to as high as 14.8% in a severe-stress scenario resulting from the pandemic, the RBI had said in its last financial stability report (FSR). Volatile trends could emerge on provisions as lenders are likely to dip into Covid provisions made earlier or make higher provisions this quarter as well.

Analysts at Motilal Oswal Financial Services said while overall trends in asset quality had fared better than expectations, the recent surge in Covid-19 cases and the fear of a lockdown in key districts necessitate being watchful on asset quality. “While many banks have already provided for this likely increase and carry additional provision buffers, which should limit the impact on profitability, we expect them to continue to strengthen their balance sheets and credit cost to remain elevated,” they said in a report.

While analysts have mixed views on the pace of loan growth, most of them expect it to be driven by retail credit. Corporate credit growth remains muted in a scenario of overall deleveraging and lower risk appetite on the part of lenders.

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Banks set to post weak revenue growth in Q3: Analysts

Personal Finance

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The margin trajectory will remain moderately under pressure, given the continued monetary easing, low lending rates and relatively higher liquidity on bank balance sheets.

Banks are likely to post weak revenue growth for the December quarter, analysts said, even as the loan growth improved and bad loan recognition remained paused. Conversations around asset quality, recognition, provisioning and the recovery cycle are likely to continue this quarter between banks and sector analysts.

Kotak Institutional Equities (KIE) on Wednesday said in a report that the overall revenue growth for banks could stand at around 6% year-on-year (YoY), while net interest income grows 10%. Weak loan growth will have a role to play. According to the latest available data, loan growth has been stuck between 5% and 7% YoY since the onset of Covid, compared to 8-10% a year ago. “While credit demand is recovering from post-lockdown lows along with approval rates and share of NTC (new-to-credit) originations, we expect loan growth recovery to be slower than expectations of market participants,” KIE analysts said. The current account savings account (CASA) ratio will be broadly stable or improving for most players in a low-interest rate environment.

The margin trajectory will remain moderately under pressure, given the continued monetary easing, low lending rates and relatively higher liquidity on bank balance sheets, said analysts from Motilal Oswal Financial Services. “Negative carry on NII on higher slippages could also impact margins. However, banks with a strong liability franchise are better placed to tackle margin pressure,” the brokerage said, adding that there could be a low single-digit impact on margins.

Sector experts will be closely parsing data on slippages and provisioning in the absence of regular non-performing asset (NPA) recognition. KIE said it will be looking at broadly three parts to the asset quality issue – the outstanding overdue book, including special mention accounts (SMA), 90+ days past due (DPD) and pipeline of fresh restructuring of loans; the commentary on provisions that is likely to be used and carried forward; and growth, if business is normalising.

“A higher-than-expected slippage this quarter, but a positive commentary of the future worries the most,” KIE wrote, adding, “It raises uncertainty and would result in investors asking fresh evidence of improvement while a lower slippage and better commentary on growth is probably the best outcome, which appears to be a low probability.”

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