Bank of India (BOI) expects 10-12% credit growth in FY23 as the multiplier effect of the government’s capital expenditure plan kicks in. The bank is also of the view that the monetary tightening by the Reserve Bank of India (RBI) will not have a significant impact as demand will “overpower everything”.

BOI today reported a 142% jump in net profit to ₹606 crore in Q4 FY22 compared with ₹250 crore in Q4,FY21 owing to improvement in the net interest margins. In the financial year 2021-22 net profit was up by 58% to ₹3,405 crore compared with ₹2,160 crore in the previous financial year.

Interacting with media after the announcement of the quarterly results, BOI managing director and CEO Atanu Kumar Das said, “We expect credit growth in the range of 10-12% in the current financial year. We believe that this year apart from the other segments, the corporate credit will also grow as the multiplier effect of the government’s ₹7.5 lakh crore capital expenditure plan kicks in.” The domestic advances grew 8.73% year on year to ₹3,93,991 crore in FY22.

Being asked about the impact of the reversal of the rate cycle as RBI begins raising the policy rates, Das said, “Credit demand will pick up. Demand will overpower everything. There will be new price discovery in the markets.”

During the interaction, the bank also mentioned that it has made provision for full exposure to the tune of ₹1,000 crore to the Future Retail, while 50% provisioning has been done for its exposure of ₹963 crore to the Srei Infrastructure. Both the companies are currently undergoing insolvency proceedings in the National Company Law Tribunal (NCLT).

The bank witnessed an improvement in its asset quality. Gross non-performing assets (NPAs) declined to 9.98% as of March, 2022 against 13.77% in March 2021. Net NPA was down at 2.34% in the year ending March 2022, compared with the year-ago period.

On fund raising plan, Das said currently the government share is 81% which will be brought down to 75%. The bank is working on the modalities. It may opt for QIP or FPO route.

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