Bank of India Reports 35% Surge in Q3 Profit Amid Decline in Bad Loans

State-owned Bank of India (BoI) announced a robust performance for the December quarter, posting a 35% year-on-year (YoY) rise in net profit to Rs 2,517 crore.

This increase, compared to Rs 1,870 crore in the same quarter last year, is attributed to a significant reduction in bad loans.

Growth in Total Income and Interest Income

The bank’s total income surged to Rs 19,957 crore in Q3 FY25, up from Rs 16,411 crore a year earlier, as per the regulatory filing.

Interest income also witnessed a rise, climbing to Rs 18,210 crore compared to Rs 15,218 crore in the same period of the previous fiscal year.

The net interest income (NII), which reflects the difference between interest earned and interest paid, increased by 11% YoY to Rs 6,070 crore, up from Rs 5,463 crore in Q3 FY24.

Improved Operating Profit and Asset Quality

Operating profit for the quarter rose to Rs 3,703 crore, a jump from Rs 3,004 crore in the corresponding period last year. The bank’s asset quality also improved considerably.

Gross non-performing assets (NPAs) declined to 3.69% of gross loans by the end of December 2024, compared to 5.35% a year ago. Net NPAs fell to 0.85% from 1.41% during the same period.

Stable Capital Adequacy and Enhanced Provision Coverage Ratio

Bank of India’s capital adequacy ratio remained steady at 16%, slightly down from 16.06% at the end of December 2023.

The Provision Coverage Ratio (PCR) improved to 92.48%, up from 89.95% in the previous year’s corresponding quarter, indicating better financial health and preparedness for bad loans.

Highlights from Q3 Performance

Advances and Deposits: Advances grew by 15.3% YoY to Rs 5.65 trillion, while total deposits increased by 12.29% YoY to Rs 7.07 trillion. Retail advances showed robust growth, rising by 21.22% YoY to Rs 1.27 trillion. However, the share of low-cost CASA deposits fell to 41.05% from 43.88% in December 2023.
Non-Interest Income: Non-interest income, including fees, commissions, treasury revenues, and recoveries, grew by 46% YoY to Rs 1,746 crore. This included a profit of Rs 266 crore from the sale and revaluation of investments, compared to a loss of Rs 129 crore in Q3 FY24.
Treasury and Recovery Gains: Commissions, exchange, and brokerage revenues rose by 16% to Rs 462 crore, while recovery from written-off accounts increased by 16% YoY to Rs 391 crore.

Sequential Growth and Profit Guidance

The bank reported a 6% sequential increase in net profit, rising from Rs 2,374 crore in the September quarter of FY25.

Bank of India’s Managing Director and CEO, R Karnatak, highlighted during a post-results interaction that the growth in profit reflects contributions from core operations, including NII, commissions, cross-selling, and investment gains.

The bank is optimistic about achieving its net profit guidance of Rs 8,000 crore for FY25.

Moderation in Net Interest Margin (NIM)

Despite the growth in NII, the net interest margin (NIM) slightly moderated to 2.80% in Q3 FY25 from 2.85% in Q3 FY24. The bank has projected NIMs to remain in the range of 2.85-2.89% for the current fiscal year.

Outlook for FY25

For domestic operations, Bank of India expects advances to grow by 14-15% YoY and deposits to expand by 13-14% by the end of March 2025.

Karnatak affirmed that the bank remains focused on maintaining its strong financial performance.

Market Performance

Shares of Bank of India ended 1.5% lower at Rs 98.30 apiece on the Bombay Stock Exchange (BSE) on Friday, ahead of the results announcement.

The public sector lender has a market capitalization of Rs 44,752.73 crore as of the latest update.

Key Financial Metrics at a Glance

Net Profit: Rs 2,517 crore (up 35% YoY)
Total Income: Rs 19,957 crore (up 21.6% YoY)
Gross NPAs: 3.69% (down from 5.35%)
Net NPAs: 0.85% (down from 1.41%)
Capital Adequacy Ratio: 16%
Provision Coverage Ratio: 92.48%

Bank of India’s December quarter performance underscores its resilience and steady progress in improving financial metrics, supported by growth in core operations and efficient asset management.