State-owned Bank of India posted a 7 percent year-on-year increase in net profit for the December quarter, with earnings rising to Rs 2,705 crore. The performance was supported by a sharp improvement in non-interest income, even as margins remained under pressure.
Net Interest Income Rises, Margins Narrow
The bank’s net interest income increased 6 percent from a year earlier to Rs 6,461 crore, aided by a 14 percent growth in advances. Net interest margin, however, declined to 2.57 percent compared with 2.80 percent in the year-ago period, reflecting the impact of rate movements on the loan book.FY26 Loan Growth Guidance and Margin Outlook
Managing Director and Chief Executive Rajneesh Karnatak said the bank is aiming to maintain loan growth in the range of 13 to 14 percent in FY26. He noted that margins will remain challenging as the full impact of the cumulative 1.25 percent rate cut by the central bank gets transmitted across the portfolio.The bank is targeting to exit FY26 with a net interest margin of around 2.60 percent.
Non-Interest Income Surges 30%
Non-interest income jumped 30 percent year-on-year to Rs 2,279 crore during the quarter. This was largely driven by a 78 percent rise in profits from the revaluation of investments, which stood at Rs 473 crore, providing a meaningful boost to overall profitability.Strong Domestic Advance Pipeline
Amid ongoing geopolitical uncertainties, the bank said it will focus on expanding domestic advances. It has an advance pipeline of Rs 80,000 crore at various stages of sanction and disbursement.Corporate advances account for Rs 65,000 crore of this pipeline, with about 60 percent comprising term loan proposals intended for new investment activity.
Asset Quality Improves Sequentially
Fresh slippages during the quarter were stable at Rs 1,100 crore. These included a single exposure of Rs 108 crore to the road sector. Asset quality improved, with the gross non-performing assets ratio declining to 2.26 percent from 2.54 percent in the previous quarter.Provisions for bad and doubtful debts remained steady at Rs 205 crore for the reporting period.
Deposit Growth Faces Systemic Challenges
Total deposits grew 11.64 percent year-on-year. The bank highlighted challenges in deposit mobilisation across the banking system, citing a structural shift as savers increasingly move funds to higher-yielding alternatives such as mutual funds and equity markets.The share of low-cost current and savings account deposits declined to 37.97 percent from 41.05 percent a year earlier, as customers maintained only optimal balances with banks.
Capital Position and Provisioning Impact
The bank’s capital adequacy ratio stood at 17.09 percent as of December 31, 2025. The lender said it is not considering an equity fund raise at present.The bank expects a cumulative 2 percentage point impact on its capital buffers over five years due to the implementation of the expected credit loss provisioning framework. The total provisions required under this transition are estimated at Rs 9,200 crore.
Stock Performance
Shares of Bank of India closed 1.32 percent lower at Rs 157.55 apiece on the BSE on Wednesday, compared with a 0.33 percent decline in the benchmark index.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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