A recent press report said that the increase in cost of deposits and higher provisions have resulted in the fall in net profit for Bank of India in the April-June 2011 quarter. The net profit of the bank is at Rs. 517.50 crore in the quarter which is 29 per cent lower compared with Rs 725 crore in the corresponding period last year.
Mr. Alok K. Misra, Chairman and Managing Director, of the bank said that the elevated cost of deposits adversely affected the net interest margin, resulting in lower profitability. He said that the increase in bad loans also impacted profits. The bank’s cost of deposits jumped by 122 basis points to 6.01 per cent from 4.79 per cent in the April-June 2010 quarter.
The bank portfolio of the bank includes home loan, car loan, business loan, personal loans etc. The Gross NPAs have increased by 21 per cent to Rs 5,791 crore as on June-end 2011. In this quarter, 12 restructured accounts constituting Rs. 3,59.1 crore in the infrastructure, agriculture, engineering and steel sectors have fallen into the NPA category.
Mr. Misra said that the bank will have to raise Rs 4,500 crore over the next two years in order to fund its expansion plans.