MUMBAI Bank of India, the country's third largest state-run lender by assets, reported a fourth quarter loss, but hopes a gradual upturn in the economy will help to ease the burden of bad loans in its new financial year.
The quarterly loss, at 35.87 billion rupees ($529.92 million), was the third in a row for the Mumbai based lender as it set aside more money to cover a surge in bad loans. It made a net loss of 561.4 million rupees in the same quarter last year.
Including Bank of India, 12 state-run banks have now posted combined losses of 206.43 billion rupees in the March quarter due to a surge in provisions for bad debt after a clean-up ordered by their regulator, Reserve Bank of India.
Melwyn Rego, who took over as Bank of India's chief executive in August, said it was "cautiously optimistic" about an improved performance in the current fiscal year that began in April, adding the lender's asset quality was stabilising.
Bank of India's gross bad loans as a percentage of total loans rose to 13.07 percent in the quarter ended March, from 9.18 percent in December. Provisions, including for loan losses, more than doubled from a year earlier to 54.70 billion rupees.
Stressed loans, which include bad loans and restructured loans, stood at 575.86 billion rupees or 15 percent of total loans as of end-March, the bank said.
Rego also said the bank was lowering exposure to companies and was instead growing its comparatively safer retail loan book including housing loans.
"Our recovery efforts have moved up substantially," Rego said.
The bank aims to recover 175 billion rupees in the current fiscal year ending March 2017 from some of its bad loans and by upgrading some weak accounts to performing ones, compared with 109.2 billion rupees the previous year, Rego said.
Bank of India also aims to sell 10 billion rupees worth of non-core assets in the current fiscal year.
It is looking to raise as much as 85 billion rupees of capital this fiscal year, including up to 50 billion via share sale, Rego said.
($1 = 67.6900 Indian rupees)
(Writing by Suvashree Dey Choudhury and Devidutta Tripathy; Editing by Mark Potter)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Firstpost is now on WhatsApp. For the latest analysis, commentary and news updates, sign up for our WhatsApp services. Just go to Firstpost.com/Whatsapp and hit the Subscribe button.
Updated Date: May 24, 2016 21:20:49 IST