Bank of India Q1 FY27 earnings call

Bank of India delivered a strong Q1 FY27, with Net Profit increasing by 36.23% YoY to Rs. 3,068 crore and Operating Profit improving by 25.99% YoY to Rs. 5,051 crore. Net Interest Income (NII) grew by 12.61% YoY to Rs. 6,833 crore, while Non-Interest Income saw a 19.07% YoY increase to Rs. 2,579 crore. The bank's global business expanded by 16.57% YoY to Rs. 17.55 lakh crore, demonstrating robust growth across key financial metrics.

The bank has launched several strategic initiatives, including a dedicated centralized Sales Vertical to streamline business outsourcing and a Strategic Business Branch in Mumbai for high-value transactions. Digital convenience was enhanced with a Virtual Personalized Debit Card and the BOI Star Choice Current Account, allowing customers to select account numbers. A Centralized Video Customer Identification Process Centre was operationalized for seamless digital account opening, and the Kenya Mobile Banking App went live, integrating M-PESA. Efforts are also underway to revamp Cash Management Services with dedicated field staff and build AI/digital capabilities.

Global Deposits increased by 14.90% YoY to Rs. 9.58 lakh crore, with domestic deposits growing by 16.15% YoY to Rs. 8.25 lakh crore. Global Gross Advances rose by 18.64% YoY to Rs. 7.98 lakh crore, and domestic gross advances increased by 19.20% YoY to Rs. 6.74 lakh crore. RAM advances showed a strong growth of 19.75% YoY, reaching Rs. 3.93 lakh crore and constituting 58.30% of total advances, reflecting a focused growth strategy.

Asset quality significantly improved, with the Gross NPA ratio declining by 111 bps YoY to 1.81% and the Net NPA ratio improving by 24 bps YoY to 0.51%. The Provision Coverage Ratio (PCR) strengthened to 93.83% from 92.94% in Jun'25, and credit cost declined to 0.15%. The Capital Adequacy Ratio (CRAR) also improved to 18.69% from 17.39% YoY, indicating a strong capital buffer for future growth.

The CASA ratio stood at 36.68%, with management acknowledging a 3% reduction in CASA per capita percentage and retail term deposits due to structural changes in saving patterns. To optimize cost of deposits and support credit growth, the bank is focusing on bulk deposits, particularly in the Rs. 3 crore to Rs. 25 crore bucket. On the advances front, the strategy involves growing MCLR advances and mid-corporate advances through emerging corporate credit branches, targeting better interest rates.

The bank has set ambitious targets for international funding, aiming to raise $1.2 billion through FCNR(B) by September 30, 2026, and an additional $3 billion ($2 billion from OFCB/MTN and $1 billion from ECB) by December 31, 2026. These initiatives are expected to provide a clean spread and cost benefits. The bank also has a strong pipeline in international business, including in Gift City, and is re-strategizing its international loan book to replace low-margin trade finance with Indian and domestic corporate exposures.

The bank has revamped its credit card offerings and aims to achieve a credit card base of 3 lakh by the end of FY27. For personal loans, the bank has implemented 'guardrails' due to perceived risks in low-ticket and non-salaried segments, focusing instead on salaried individuals with accounts and NACH mandates with the bank, prioritizing asset quality over aggressive growth in this segment.

As part of its cost optimization strategy, Bank of India has rationalized some of its ATMs, particularly those operating at a loss under the CAPEX model. This move contributes to reducing the cost to income ratio, which stood at a healthy 46% in Q1 FY27. The bank aims to maintain the cost to income ratio around 48-49% for FY27 on a consistent basis.