Bank of India net rises 70% on higher income

Bank of India recorded a 70-per cent growth in net profit at Rs 872 crore, for the quarter ended December 31, 2008, against Rs 512 crore in the corresponding quarter last year. The growth came from higher interest income and non-interest income.

In the third quarter, the bank consciously adopted a policy of not growing the balance sheet by huge amounts in order to contain the cost of funds, said Mr T.S. Narayanasami, Chairman and Managing Director.

Analysts had predicted a net profit growth of 30-40 per cent for the bank.

Although the cost of funds moved up to 5.59 per cent (5.24 per cent), the bank was able to maintain net interest margin at 3.4 per cent (3.14 per cent).

“Going ahead, I will be happy to maintain the net interest margin at 3 per cent. It will be difficult to go beyond that,” Mr Narayanasami said.

The huge rise in other income was due to the higher trading profit at Rs 400 crore (Rs 116 crore).

The credit growth in the retail segment has been flat at 1.08 per cent, as the bank had consciously decided to slow down in the retail segment, said Mr B.A. Prabhakar, Executive Director.

For the current fiscal, the credit target has been revised upwards from 20 per cent to 24 per cent and there will be greater commitment to the SME, auto and housing sectors, he added.