InvestorQ : How did Bank of India report such a sharp spike in net profits in the latest Dec-20 quarter?
Dhwani Mehta made post

How did Bank of India report such a sharp spike in net profits in the latest Dec-20 quarter?

Answer
image
Dilmini Mercia answered.
2 months ago
Follow

It was a stellar quarter for Bank of India helped along the way by substantially lower provisioning in the quarter compared to the prior periods. Bank of India reported a more than four-fold jump in Q3 net profit for the Dec-20 quarter at Rs.610 crore. This was largely triggered on the back of lower provisioning for doubtful debts and likely loan losses.

Total revenues if the bank were 7.9% lower at Rs.12,373 crore, which has been a standard trend with most of the loans yield lesser due to lower rates. The treasury income was up sharply and retail banking income was flat. However, as with other banks in India, the pressure came from corporate banking income which was down 34%. As a result, the OPM tapered from 30.96% to 22.92% as higher employee cost added to the problems.

Gross NPAs were lower at 13.25% but still too high in absolute terms if you compare with the private sector banks. The annualized ROA at 0.28% is below the industry median, which is closer to around 0.6% and this indicates low profitability. The big question is how does the bank build its loan book for future when the capital adequacy is at just 13.25%.

1 Views