Business Opportunities'Rs 6,400-cr advances restructured'
B A Prabhakar, Executive Director, Bank of India, says the bank’s net interest margins have contracted due to a rise in the cost of deposits. Excerpts:
- Little room for immediate cut: Bankers - FII-TO-FII: Grasim Ind traded at 3% premium - Govt borrowings may hurt private sector, admits RBI - BoB posts 85% rise in bottom line for Q1 - Gross tax revenue budgeted to decline, says RBI - Kharif production could be affected, says RBI
Your 10% top line and 4% bottom line did not go down well....
Our cost of deposits went up from 5.51 to 5.81 per cent and cost of funds increased from 5.13 to 5.4 per cent. The yield on advances improved only from 9.15 to 9.27 per cent. That difference between costs and yields has affected net interest income growth.
Net NPAs aren’t moving well. Is this due to a change in the risk profile of customers or the change in RBI guidelines?
Net NPA has gone up mainly because of the RBI guidelines on floating provisions. We have seen some stress in assets’ quality in the first quarter and gross NPAs went up because of this.
How will provisioning pan out in the next three quarters?
We are making provisions on doubtful advances to be extended by 100 per cent this year.
Why is there a sharp drop on the retail side and what’s the outlook?
The portfolio itself is going down and retail advances are not growing in line with that. To some extent, expensive retail deposits have led to a decline in revenues.
What is the restructuring portfolio looking like?
In this quarter, we have restructured Rs 1,600 crore of advances, and as of March 31, we had restructured advances worth about Rs 5,000 crore. So, together, we have restructured about Rs 6,400 crore of advances. This is 5 per cent of gross advances.