Bank of India Q2 FY25 Earnings: Net Profit Surges 63% on Higher Non-Interest Income

Bank of India (BoI) recorded a substantial 63% year-on-year (YoY) increase in net profit, reaching ₹2,374 crore in the second quarter of FY25, primarily driven by a 49% rise in non-interest income from treasury gains and recoveries. Sequentially, this is a 39.4% rise from ₹1,703 crore in Q1FY25. The bank’s shares closed at ₹112.25 on the BSE, up 0.63% on the day of the results.

Net Interest Income and Margin Trends 

BoI’s Net Interest Income (NII) grew by 4% YoY, totalling ₹5,986 crore in Q2FY25. However, its Net Interest Margin (NIM) dropped to 2.82%, compared to 3.08% in Q2FY24 and 3.07% in Q1FY25. CEO Rajneesh Karnatak attributed the decline in NII and margins to ₹20,000 crore in corporate loan repayments in July. He anticipates that recent disbursement activity will enhance NII and NIM, projecting NIMs to reach 2.9% by FY25’s end.

Non-interest Income and Provision Adjustments 

Non-interest income rose by 49% YoY to ₹2,518 crore, driven by a significant increase in gains from the sale and revaluation of investments, which jumped to ₹730 crore in Q2FY25 from ₹81 crore a year earlier. Recoveries from written-off accounts also grew by 22% YoY to ₹685 crore. Provisions for NPAs more than doubled to ₹1,427 crore due to a ₹200 crore provision for a public sector telecom unit that became an NPA.

Asset Quality Improvement 

BoI’s asset quality showed improvement, with gross NPAs down to 4.41% in September 2024 from 5.84% a year earlier. Net NPAs also declined from 1.54% to 0.94% over the same period. The Provision Coverage Ratio (PCR), including written-off accounts, rose to 92.22%, compared to 89.58% in September 2023.

Growth in Advances and Deposits 

Total advances grew by 14.51% YoY to ₹6.21 trillion, with retail advances seeing a robust 21.61% increase, reaching ₹1.21 trillion by September 2024. BoI expects overall credit growth of 14% in FY25, supported by ₹70,000 crore in sanctioned credit across corporate, retail, agriculture, and MSME segments.

Deposits grew by 10.15% YoY to ₹7.75 trillion. However, the share of low-cost deposits (CASA) in domestic business decreased to 41.18% from 43.13% a year earlier. The bank has set a 13% deposit growth target for FY25 and will raise ₹5,000 crore through infrastructure bonds to support lending.

Capital Position and Fundraising Plans 

BoI’s capital adequacy ratio stood at 16.63%, with a Tier-I equity ratio of 13.52% at the end of September 2024. The bank plans to issue Tier-I bonds worth ₹2,500 crore in the second half of FY25 and does not currently intend to raise additional equity capital.

On November 12, 2024, Bank of India share price opened at ₹111.98 and touched the day low of ₹111.00 at 09:39 AM.

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