Mumbai, June 22: Bank of India (BoI) has shocked the market by managing to post a little over one per cent growth in its net profit in 1997-98. The Mumbai-based public sector bank has recorded a net profit of Rs 364.51 crore in 1997-98, up from Rs 360.02 crore in the previous fiscal. Without exception, all leading broking houses were expecting at least a 20 per cent growth in BoI's net profit.The BoI board, which met in Mumbai to finalise annual accounts, has recommended a dividend of Rs 2 per share of Rs 10. In the first half of 1997-98, BoI had posted a net profit of Rs 221 crore. Analysts were baffled at BoI's results. No bank executive was available for comment.
According to sources, the major contributing factors to the bank's dismal show were a jump in the interest expenses from Rs 2,372.24 crore to Rs 2,651.11 crore, hike in the operating expenses from Rs 1,050.81 crore to Rs 1,167.76 crore and provisions and contingencies from Rs 219.48 crore to Rs 332.67 crore.
The bank's interest incomeduring the year went up from Rs 3,513.39 crore to Rs 3,935.90 crore while its other income moved up from Rs 490.16 crore to Rs 579.95 crore.
Interest income, the traditional source of growth for the bank, was under pressure this fiscal due to the economy slowdown and increasing competition from the newly set-up private sector and foreign banks. In a scenario of overall reduction in the spread for old banks, BoI was able to report a slight increase in its spread to 3.32 per cent in the first half from 3.21 per cent reported in the earlier year. In the first half of this fiscal, BoI recorded an eight per cent growth in interest income.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
