The Bank of India (BoI) received covid-19 debt overhaul requests from 50,000 borrowers for loans totaling ??6,100 crore, chief executive AK Das said, lower than the state bank had originally forecast.
“When we identified the eligible accounts, there were approximately 300,000 eligible accounts involving ??23,000 crores. In addition, from ??6,100 crore, we have already implemented ??1,200 crore of restructuring, ”Das told reporters on Wednesday.
After a six-month moratorium on loan repayments, the Reserve Bank of India (RBI) allowed banks to restructure loans from distressed borrowers without classifying them as bad debts, saving them from excess provisions.
Mint reported on February 8 that banks had so far agreed to overhaul ??$ 1,000 billion in stressed loans, slightly above 1% of their aggregate loan portfolios.
Analysts had estimated it to be between 2.5% and 4.5% of all loans.
The bank on Wednesday announced a more than five-fold increase in its net profit to ??541 crore in the December quarter as provisions fell. The total of its provisions and contingencies decreased by 50.68% compared to a year ago at ??1,980 crore in the December quarter. The bank’s net interest income (NII), the difference between interest earned and spent, decreased by 9.19% to ??3,740 crores. Its net domestic interest margin (NIM), a measure of profitability, was 2.81% as of December 31, 2020.
“We transferred around 60 basis points (bps) under the key rate transmission and in repo-linked loans (it was) around 40 bps. On the other hand, we only passed on 38 bps to our risk-weighted deposits. As the repricing of the deposits takes a little longer to show the effect, there was an impact on our NII, ”Das said.
The bank’s gross non-performing assets (APM) as a percentage of its gross advances stand at 13.25% as of December 31, 2020 compared to 16.3% in the same period last year. However, without the Supreme Court ruling of September 3 on asset classification, the bank’s gross bad debt ratio would have reached 14.59%.
“In the future, in the worst case, this gross NPA of 13.25% could at most rise to 14.25%. We are aiming for a recovery of ??2,500 crore in this quarter, of which ??575 crore has been made, ”Das said.
Unlike some of its peers, the bank does not see an increase in delinquency in the retail loan portfolio. Das said retail delinquencies are around 2.3%, which is very low compared to overall delinquency.
“We don’t see a lot of challenges in the retail space. In secured loans, as they call it, there will always be less delinquency compared to other segments and the collection margin is much better there as well. We do not anticipate a very serious challenge in the retail lending segment when it comes to asset quality, ”he said.
The lender’s loan book amounted to ??4.14 trillion in the December quarter, up 9.59% year-on-year. His total deposits amounted to ??6.11 trillion, 17.19% more than the same period last year.
“At the start of the year, we said that by going through the pandemic and the uncertainties, we would like to be less conservative because we were aware that there would be a lot of dams in the ecosystem and we had granted a (growth credit ) by 7.5%, ”Das said, adding that the bank would now revise its estimate of credit growth for FY21 to 8-8.5% and 10-12% in FY22.
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