The Hindu Business Line : Bank of India Q1 net up 5.5 pc

BANK of India has reported a 5.5 per cent increase in its first quarter net profit at Rs 171.74 crore as against Rs 162.69 crore in the year ago period.

Announcing the results here today, Mr M. Balachandran, Chairman and Managing Director of the bank, attributed the growth in profits to higher yields on advances, increase in low-cost deposit and focus on retail credit and SME sector.

Total income for the quarter increased to Rs 1,858.9 crore (Rs 1,683.66 crore). Net Interest Income increased to Rs 558.96 crore (Rs 538.42 crore). Net NPA decreased to 4.18 per cent (2.57 per cent).

Deposits grew to Rs 80,492 crore (Rs 72,185 crore) and gross advances grew to Rs 57,992 crore (Rs 48,111 crore). Retail credit increased to Rs 10,769 crore (Rs 8,430 crore).

Mr Balachandran said, "Our cost of deposits declined to 4.03 per cent from 4.11 per cent last year, while yield on advances has increased to 7.32 per cent from 7.03 per cent last year."

About a likely rise in deposit rates, Mr Balachandran said as interest rates are firming up and liquidity is drying up, there is need to offer higher deposit rates.

However, the bank would not do it in isolation, he added.

For the fiscal 2005-06, Bank of India has targeted a growth of 18 per cent in deposit and 20 per cent in credit. For this, the bank will focus on low-cost deposits.

"Our savings deposits will grow because we are technologically ahead. Internet Banking and ATMs will enable us to increase savings deposits," he said.

About the Bank picking up stake in a stock broking firm, Mr Balachandran said banks today should be financial services provider and today people are interested in capital market investments.

The Bank is also planning to set up a branch exclusively for government business in Nagpur, which will handle customs tax, central excise tax and CBTD collection.

The Bank's government business is Rs 27,000 crore a year.

Public issue

The bank is likely to raise Rs 100 core through a follow-on public issue in the second half of this fiscal, said Mr M Balachandran, Chairman and Managing Director.

The Bank is also looking to open branches in Pakistan and Bangladesh and is awaiting approval from the Government.

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