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Analyst Meet / AGM - Analyst Meet

Targets recoveries and upgradations of Rs 17500 crore for FY2017

Bank of India

24-May-2016, 09:25
Bank of India conducted an analyst meet on 24 May 2016 to discuss its financial results for the quarter ended March 2016. M Rego, MD and CEO of the bank addressed the meet:

Highlights

* The bank has received capital infusion of Rs 3605 crore from the Government of India, subscription of Rs 418 crore from LIC and Rs 40 crore from GIC of India on preferential issue basis. Bank has also raised Tier II Capital of Rs 3000 crore from private Institutions.

* The Bank's CET-I Capital was further augmented by Rs 6000 crore on account of RBI relaxations on Revaluation Reserve, Foreign Currency Translation Reserve and DTA measures.

* The bank is looking at sale of non-core assets to improve its capital position in FY2017. The bank is targeting Rs 1000 crore from sale of non-core assets in FY2017.

* The Bank has posted net loss of Rs 3587 crore in Q4FY2016, as provisions increased from Rs 2256 crore in Q4FY2015 to Rs 5470 crore in Q4FY2016. Further, the Bank has posted net loss of Rs 6089 crore in FY2016 as compared with a net profit of Rs 1709 crore for FY2015.

* As per the bank, the losses for FY2016 were mainly driven by the impact of non-recurring items such as deferred provisions of previous year to the tune of Rs 1482 crore, provisions of Rs 1412 crore on account of adopting the new LIC mortality table, provision of Rs 4073 crore towards AQR slippages and provision of Rs 300 crore for UDAY scheme and Punjab Food Corporation account totaling to Rs 7267 crore, which is much higher than the net loss of Rs 6089 crore for FY2016.

* Net Interest Margin (Domestic) stood at 2.43% in Q4FY2016, as against 2.23% Q3FY2016 and 2.27% for Q4FY2015. NIM stood at 2.50% for the FY2016.

* Bank's Domestic network stood at 5016 Branches, 7807 ATMs and 37 Extension Counters. The bank has a presence in 22 countries thourgh 61 branches. The average of the bank employees has declined to 40 years, while about 55% of the bank employees has average age below 35 years.

* Bank has been working on three pronged strategy a. NPA management, b. CASA improvement and c. loan book rebalancing. going forward FY2017, the bank proposes to vigorously pursue the strategy.

NPA Management

* The bank has fully implemented the classification of loans as NPAs under Asset Quality Review (AQR) of the banking system conducted By the Reserve Bank of India (RBI). The fresh slippages of Rs 11000 crore in FY2016, were on account of AQR.

* On account of the close monitoring of the all accounts, the bank has exhibited sharp 33% decline in SMA 2 category advances in Q4FY2016.

* The fresh slippages of advances jumped to Rs 16805 crore in the quarter ended March 2016, while the recoveries, upgradations and write-offs stood at Rs 3445 crore. The GNPA ratio moved up from 9.18% at end December 2015 to 13.07% at end March 2016.

* Total Standard Restructured advances stood at Rs 12872 crore in March 2016 against Rs 21828 crore in March 2015 and Rs 17270 crore in December 2015.

* Total Stressed Assets (NPA + Restructured Standard Advances), as per RBI norms stood at Rs 57586 crore accounting for 15% of Global advances.

* The bank expect a asset quality challenge to continue for next two-three quarters. However the bank expect the magnitude of asset quality problems to be lower FY2017 compared with FY2016.

* The reduction in NPAs by way of Cash Recovery and Up-gradation jumped more than three-times from Rs 3483 crore in FY2015 to Rs 10787 crore in FY2016.

* However, the bank has targeted recoveries and upgradations of Rs 17500 crore for FY2017, while expects the fresh slippages to be matching to recoveries and upgradations. With the growth in loan book and stable GNPA book, bank expects the GNPA ratio to exhibit improvement in FY2017.

CASA improvement

* CASA ratio (domestic) improved from 29.48% in March 2015 to 34.18% at end March 2016, driven by CASA deposit growth of 12% and shedding Bulk Deposits to Rs 58980 crore at end March 2016.

* The share of Retail Time Deposits of Rs 1 crore and less has grown by 12% YoY and constitutes 71% of Bank's total time deposits as on March 2016 as against 58% as at March 2015.

* The bank is targeting 19% growth in CASA deposits for FY2017, of which savings account deposits are expected to grow 20% and current account deposits are expected to rise 15% in FY2017. Overall, the CASA deposit ratio is targeted to be improved 37% by March 2017.

Loan book rebalancing

* As a conscious step towards Balance Sheet consolidation, the bank has reduced total assets by Rs 8784 crore to Rs 609914 crore at end March 2016 over March 2015. Similarly in order to conserve the Capital, the Risk Weighted assets (RWA) were brought down by Rs 19769 crore to Rs 343754 crore in March 2016, indicating the efficiency of Capital conservation measures, over March 2015.

* Total Business of the Bank declined 5% to Rs 894667 crore at end March 2016 over March 2015, as deposits fell 4% to Rs 513005 crore, while gross advances declined 7% to Rs 381662 crore.

* Against your overall fall in loans book, the retail loan book the bank has recorded 14% Growth while agriculture loan Book has recorded 17% increase at end March 2016 over and March 2015.

* the bank has improved the share of retail loans to 49% in March 2016 from 44% at end March 2015. Bank proposes to raise the share of retail loans to 55% by and March 2017.