The dismal show on the net profit front by BoI was despite a 20 per cent rise in the operating profit at Rs 697 crore this year. BoI has reported a substantially higher operating profit, compared to other public sector banks. BoI's net spread during the year shrank to 3.05 per cent from 3.21 per cent.

BoI had to provide for Rs 332.67 crore against NPA in 1997-98 as against Rs 4 crore provided in the previous year. The high NPA provision has, apart from wiping away the benefit of Rs 121.74 crore accruing from writeback of excess provisions on investments, eaten into the 20 per cent growth recorded in the operating profits.

According to S Gopalakrishnan, the newly appointedexecutive director of the bank, the provisions for NPAs shot up this year due to the general economic slowdown and stringent NPA provisioning on accounts affected by south-east Asian crisis as well as some old accounts. The net NPA of the bank moved up to 7.34 per cent from 6.5 per cent. The bank has provided Rs 332.67 in 1997-98 under provisions and contingencies as against Rs 219.48 crore in the previous year. The break-up of provisions and contingencies shows that the bank provided Rs 332.67 crore for NPAs, followed by Rs 116 for taxation and Rs 22 crore for other provisions, amounting to total provisions of Rs 454 crore. The final provisions and contingency figure of Rs 332.67 crore is arrived at by deducing Rs 121.74 crore accrued on account of the writeback of previous years' excess provision based on this year's lower YTM.