ILFS, NCLT accounts roil BoI numbers; Q3 net loss soars to Rs 4,738 crore

State-run Bank of India Monday reported a much higher loss at Rs 4,738 crore in the quarter to December as its bad loan provisions more than doubled to Rs 9,180 crore mainly on account of the first 40 large accounts referred by the central bank for bankruptcy proceedings and also due to a fresh hit from the IL&FS crisis. The city-based bank, under the prompt corrective action (PCA) framework of the Reserve Bank since 2017, had reported a net loss of Rs 2,341 crore in the year-ago period.

Bank of India becomes the first state-run lender to be hit by the crisis at the IL&FS group, to which it has an exposure of Rs 3,400 crore. The crippled infra group has not been servicing its over Rs 94,000 crore loans and other debt instruments since September last. All the large banks, barring HDFC Bank, which reported their third quarter numbers such as Kotak Bank, Indusind and Yes Bank have been badly hit by their exposure to the crippled company which is under NCLT now.

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However, the gross non-performing assets ratio improved to 16.31 percent from 16.93. Similarly, the net NPA ratio also nearly halved to 5.87 percent in the quarter from a high 10.29 percent in the year-ago per cent, supporting the Reserve Bank claim that those lenders under the PCA are reporting better numbers especially in terms of asset quality. "The bank proactively made provisions for certain NPAs, including 100 percent for all the NCLT-1 and 2 accounts, as a result of which the loan loss provisions increased to Rs 9,179 crore in December 2018 from Rs 4,373 crore a year ago," managing director and chief executive Dinabandhu Mohapatra told reporters.

During the quarter, BoI made additional provisions of Rs 4,321 crore for some NPA accounts, he said, adding for NCLT accounts from the first and second lists, it made a provision of Rs 572 crore. This has helped the bank improve its provision coverage ratio to 76.76 from 56.96 percent. However, t reported a healthy 33.23 percent growth in interest income at Rs 3,332 crore during the quarter. The bank recently received Rs 10,830 crore as capital from government, taking its core capital at 12.47 percent as of end-December.

"With improvement in net NPA numbers and capital front, we will work on improving our return on assets to come out of the PCA," he said. The fresh slippages in the quarter came down massively to Rs 4,315 crore, including IL&FS account worth Rs 3,400 crore, from a high Rs 18,329 crore a year ago. The bank had put Rs 11,000-12,000 crore of NPAs on sale to asset reconstruction companies in the beginning of the year and during the quarter alone it sold NPAs worth Rs 3,248 crore to ARCs.

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It expects a cash recovery of Rs 2,600 crore from resolution of NCLT accounts in the fourth quarter, Mohapatra said, adding the bank is also looking to raise Rs 1,000 crore from sale of non-core assets in the March quarter. Its global net interest margin improved to 2.55 percent from 1.88 percent, while domestic NIM inched up to 3.02 percent from 2.29 percent in a 11.10 percent growth in domestic advances at Rs 3,11,815 crore. The bank's scrip lost almost 4 percent at Rs 90.60 on the BSE as the benchmark Sensex tanked over 1 percent in a massive sell-off.

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