According to industry analysts, the double square scheme which is currently facing a huge deficit will come up for redemption in the fiscal 2000.

In the fiscal 1998-99, the net profit of the bank will not include the benefit arising out of writing back of depreciation arising on account of yield to maturity (YTM) of Government securities. In the financial year 1997-98, the bank had registered a net profit of Rs 364 crore out of which Rs 134 crore attributed to depreciation benefit of the YTM of G-Sec and Rs 40 crore came through the sale of its Singapore property during the period.

According to analysts, the low interest income on account of lowered prime lending rate (PLR) has alsocontribute to the bank's fall in net profit for the fiscal 1998-99.

However BoI is expected to maintain its operating profits at its previous year's level of Rs 696 crore.

In the current fiscal, the bank's total deposit is expected to rise to Rs 44,000 crore from Rs 39,339 crore in the previous year. Meanwhile advances are expected to go up to Rs 24,300 crore, 10.3 per cent up from the previous year's peg of Rs 22,021 crore.

In the fiscal 1997-98, the bank's gross NPA was pegged at 11.55 per cent and the net NPA at 7.34 per cent.

For the quarter ended December 1998, the bank's net profit stood at Rs 160 crore as against Rs 101 crore for the half year ended September 1998. The operating profit for the first nine month of 1998-99 stood at Rs 440 crore as against Rs 227 crore during the first half of 1998-99. During this period, the bank made provisions to the tune of Rs 280 crore.

The investment profile of the bank grew by Rs 1,900 crore during this period and non performing assets to advances ratioof the bank on gross basis was pegged at 12.87 per cent as on December 1998 as against 13.19 per cent for the period ended September 1998.

During this period, the bank recorded a total income of Rs 3,849 crore out of which interest income contributed to Rs 3,425 crore.

The bank had posted a net profit of Rs 59 crore in the third quarter ended December 1998 of the fiscal 1998-99 as against Rs 14 crore for the quarter ended September 1998.

During the quarter ended June 1998, the bank recorded an operating profit of Rs 206 crore and net profit of Rs 87 crore.

Insight

Nothing unusual

A steep fall in the bank's profitability is not entirely unexpected. The reason being the wage settlement that the public sector banks entered into with their unions in the last quarter of the financial year, which has increased the financial strain. Secondly, last year's profit was steeply inflated, and after adjusting for the same the profit will be flat and not reflect a steep fall. The saving graceis that almost all PSU banks are in the same boat.