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Analyst Meet / AGM - Analyst Meet

Expects to reduce Net NPA ratio to 6% by December 2018

Bank of India

13-Nov-2018, 12:14
Bank of India conducted an analyst meet on 12 November 2018 to discuss the financial results for the quarter ended September 2018. Dinabandhu Mohapatra, MD&CEO of the bank addressed the meet:
Highlights:

The Global Business of the bank has declined by 5% end September 2018 over September 2017 mainly on account of the dip in the overseas business. The bank has posted strong 10% growth in domestic loan book, but overseas loan book has dipped 38% due to reduction in low margin business.
The bank has posted strong CASA deposit ratio of 41.4% end September 2017
On advances front, the bank has recorded 7% growth in retail, agriculture and MSME loans end September 2018 over September 2017. The bank also has a good base of corporate clients which has helped to post 13% growth in corporate loans.
The bank has exhibited consistent improvement in credit rating profile of its loan portfolio. The share of A and above rated loan portfolio of the bank has increased to 64% end September 2018 from 38% end September 2017.
The restructured advance book of the bank stood at Rs 8981 crore end September 2018.
The bank has exposure of Rs 7604 crore of loans under NCLT list 1 and Rs 3266 crore under NCLT list 2. Overall, the bank has exposure of Rs 29359 crore of loans under NCLT. The bank is holding strong provision coverage ratio of 80.96% on NCLT first list and 85.29% on NCLT second list.
The bank has reduced net NPA ratio to 7.64% end September 2018, while also reduced gross NPA ratio to 16.36%. The bank has one of the highest provision coverage ratio in the banking sector at 69.12% end September 2018, while the bank proposes to improve the provision coverage ratio to 70% by March 2019.
The provisioning has remained elevated for the bank due to NPA aging related provisions, as the bank has started recognizing non-performing assets well ahead of AQR of the RBI in 2015.
The bank has identified 3-4 account in the power sector with exposure of Rs 3000 crore for resolution under Samadhan scheme and it is waiting for the court order. The resolution of these accounts would lead to provisions write back of Rs 1900 crore.
With regard to exposure to NBFC sector, the bank is not much focused on portfolio buyout, while there are some portfolio buyouts in pipeline.
The fresh slippages of loans stood at Rs 2624 crore in Q2FY2019, while the bank has exhibited higher recoveries and upgradations of NPA. The bank expects its fresh slippages of loans to remain at around current level for Q3 and Q4FY2019. The bank expects recoveries and upgradation to remain stronger and continue to be higher than fresh slippages of loans in H2FY2019.
The fresh slippages of loans were mainly contributed by the agriculture sector with the slippages of Rs 1200 crore in Q2FY2019.
The SMA-2 category loan of the bank stood at Rs 2800 crore end September 2018.
The securities receipts (SR) book of the bank stood at Rs 2969 crore, while the bank is holding provisions of Rs 800 crore on its SR book. The bank had made provisions of Rs 40 crore for SRs in Q2FY2019.
The bank has posted robust growth in its construction sector exposure mainly on account of government guaranteed loans in the Karnataka state for development of transmission infrastructure.
The bank expects to reduce its net NPA ratio to 6% by December 2018, which would help to exit out of PCA category bank.
The bank has put Rs 10000 crore of asset for sale, while it is also launched New OTS scheme in which is expected to help accelerate recoveries of NPAs and reduced NPA ratio.
The bank expects its overseas loan book to grow from here after. The international margin of the bank stood at 0.9%, while the bank expects to improve the overseas machine above 1% H2FY2019.
The bank has exposure of Rs 3500 crore to IL&FS group, of which exposure to holding company stands at Rs 340 crore. The bank does not see any concern on its exposure to IL&FS group.
The bank has maintained capital adequacy ratio in line with the regulatory requirement at 10.93% end September 2018. The bank has reduced risk weighted assets by Rs 31000 crore, while the ratio of credit risk RWA to advances has declined from 68.5% end September 2017 to 63.6% end September 2018.