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Analyst Meet / AGM - Analyst Meet

Targets loan growth of 8-10% for FY2018

Bank of India

10-Aug-2017, 12:12
Bank of India conducted an analyst meet on 09 August 2017 to discuss the financial results for the quarter ended June 2017. Dinabandhu Mohapatra, MD&CEO of the bank addressed the meet:
Highlights:

As per the bank, the interest income reversals, repayment of high margin FCNR deposits linked overseas loans and accelerated shift of loans to MCLR based lending rate system impacted the margins of the bank in the quarter ended June 2017. The bank expects its margins to improve going forward and touch 2.2% for FY2018.
The bank is examining the opportunities to revise the interest rate on both of assets and liabilities.
The interest income reversals on account of various restructuring schemes such as SDR and S4A amounted to Rs 196.61 crore for Q1FY2018.
The bank has controlled the growth in its operating expenses at low level driven by higher retirement of employees, while revaluation of assets contributed gains of Rs 200 crore containing the growth in operating expenses for the quarter ended June 2017.
The fresh slippages of loans declined to Rs 4037 crore in Q1FY2018 from Rs 6915 crore in the previous quarter. The slippages from restructured loans stood at Rs 30 crore in Q1FY2018.
The bank expects its asset quality to improve on sequential basis every quarter going forward. The bank has reduced fresh slippages of loans on sequential basis, while expect fresh slippages to continue moderating going forward.
The bank is planning capital raising of Rs 8000 crore.
The bank has targeted loan growth of 8 to 10% for FY2018, while the loan growth would be contributed by the retail and good quality corporate loans.
Currently, the loan mix between retail and corporate loans stood at 50-50, while bank aims to raise the share of retail loans to 52% in next one year. The margins of the banks are expected to be supported from rising share of retail loans.
The bank is in the process of rebalancing its overseas loan portfolio, while the bank may also curtail some of its overseas loan portfolio and shift to domestic book.
The bank is planning stake sale in STCI at Rs 550 per share, while the transaction is expected to be concluded in Q2 FY2018.
The SMA -2 category loans of the banks have declined to Rs 13487 crore at end June 2017 from Rs 16000 crore and March 2017.
The top 50 NPA accounts of the bank have exposure of Rs 23000-27000 crore.
The bank has exposure to 10 out of 12 accounts identified by the Reserve Bank of India for speedy resolution under IBC. The bank holds 60% provisions for these account, while some accounts are also 100% provided. The bank is well placed in terms of provision on these accounts, while banks is required to make additional provisions of Rs 900 crore on these accounts in rest of FY2018.
About 40% of loans of the bank have shifted to MCLR based lending rate system.
The bank has implemented 5/25 refinancing scheme for 18 accounts with the exposure of Rs 3629 crore and SDR scheme for 9 accounts with the exposure of Rs 2617 crore. The bank has also implemented S4A scheme for 6 account with the exposure of Rs 2805 crore. The accounts under SDR and S4A scheme are already in restructured loans category.
The bank expects to improve its CASA deposit ratio further to 42% by end March 2018.