Bank of India — Q4 FY25 earnings call

Call held 9 May 2025

Management summary

Bank of India reported a strong Q4 FY25 and full-year performance, with significant growth in net profit and operating profit, driven by robust global and RAM advances. Asset quality showed marked improvement with reduced NPA ratios and higher provision coverage. While NIM faced pressure due to interest rate changes and CASA ratio saw a slight dip, the bank is strategically focusing on non-interest income, recoveries, and digital initiatives to sustain profitability and achieve its 1% RoA target.

Highlights

  • Net profit FY25 grew 46% YoY to Rs.9,219 crores (vs Rs.6,318 crores in FY24).

  • Operating profit FY25 grew 17% YoY to over Rs.16,000 crores (vs over Rs.14,000 crores in FY24).

  • Global advances grew 13.74% YoY to Rs.6,66,000 crores, with RAM advances growing 18.37% YoY to Rs.3,23,000 crores.

  • Gross NPA ratio improved by 171 bps to 3.27% and Net NPA ratio improved by 40 bps to 0.82% in FY25.

  • Return on Assets (RoA) improved to 0.98% in Q4 FY25, nearing the 1% target.

Concerns

  • Global NIM decreased to 2.82% in FY25 from 2.97% in FY24.

  • CASA percentage declined to 40% in FY25 from 43% in FY24, despite absolute growth.

  • Yield on advances declined QoQ from 8.55% in Dec '24 to 8.27% in Mar '25 due to Repo rate cut impact.

Key financials

3 periods

Headline

  • Global Business
    ₹14.82L Cr
    YoY +12%
  • Global Advances
    ₹6.66L Cr
    YoY +13.7%
  • Global Deposits
    ₹8.16L Cr
    YoY +10.7%

Q4 FY25

  • Net Profit
    ₹2,626 Cr
    YoY +82%
  • RoA
    0.98%
  • Yield on Advances
    8.3%

FY25

  • Operating Profit
    ₹16,000 Cr
    YoY +14.3%
  • Net Profit
    ₹9,219 Cr
    YoY +46%
  • Global NIM
    2.8%
  • Gross NPA Ratio
    3.3%
  • Net NPA Ratio
    0.82%
  • PCR
    92.4%
  • CRAR
    17.8%
  • RoA
    0.9%
  • CASA Ratio
    40%
  • Yield on Advances
    8.5%
  • Non-interest Income
    ₹8,994 Cr
    YoY +48%
  • Recovery from Written-off Accounts
    ₹2,300 Cr
    YoY +61%

What they filed

Q1 FY27: revenue up 8.7%, net profit up 36.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue17,355 18,211 18,323 18,352 18,406 +6%18,927 +4%19,476 +6%19,949 +9%
Net profit2,374 2,517 2,626 2,252 2,555 +8%2,705 +7%3,016 +15%3,068 +36%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Liquidity Liquidity disclosed CRAR for FY25 improved to 17.77% as against 16.96% in March '24. Provision Coverage Ratio (PCR) improved to 92.39% in FY25 as against 90.59%.
    As on March 2025, Bank's CRAR has improved to 17.77% as against 16.96% in March '24... As regards the PCR is there, the provision coverage ratio, it has improved to 92.39% in FY 25 as against 90.59%.

Guidance & targets

Profitability

  • Return on Assets (RoA) Profitability · ensuing quarters · High confidence 1%
    Definitely, within the Top Management side, we are targeting that we should touch the ROA of 1% as soon as possible and sustain it at that number in the ensuing quarters.

    — Shri Rajneesh Karnatak, MD & CEO

Deposit

  • CASA percentage Deposit · FY26 · High confidence ~40%
    we would like to protect our CASA percentage at around 40% in FY26 also.

    — Shri Rajneesh Karnatak, MD & CEO

Non-interest Income

  • Recovery in written off accounts Non-interest Income · FY26 · High confidence maintain Rs.2,300 crore plus
    whatever the number we have taken this year, Rs.2,300 crore plus, we have done that. That kind of number we would like to maintain in this financial year also.

    — Shri Rajneesh Karnatak, MD & CEO

  • Income from transaction banking and debit mandates Non-interest Income · FY26 · Medium confidence scale up
    So this is another kind of income we have built up for the Bank, and we want to scale it up now in this financial year in FY26.

    — Shri Rajneesh Karnatak, MD & CEO

Asset Quality

  • MTNL account resolution Asset Quality · FY26 · Medium confidence resolution
    And we are expecting that in this financial year, FY26, some resolution in MTNL will come.

    — Shri Rajneesh Karnatak, MD & CEO

Market context

  • Global advances growth Volume · FY26 · High confidence 12-13%
    The guidance for global advances growth will be at around 12% to 13%.

    — Shri Rajneesh Karnatak, MD & CEO

  • Global deposit growth Volume · FY26 · High confidence 11-12%
    The global deposit growth would be at around 11% to 12% for FY26.

    — Shri Rajneesh Karnatak, MD & CEO

  • Corporate book growth Credit Growth · FY26 · Medium confidence double digit
    So in this financial year also, we are, very much confident that we'll be able to grow in a double digit as far as the corporate book is concerned.

    — Shri Rajneesh Karnatak, MD & CEO

What to watch in Q1 FY26

RoA trajectory towards 1%

next quarter (as soon as possible)
Current 0.98% (Q4 FY25)
Target >= 1%

Why it matters

Key profitability metric, management explicitly targeting 1% and sustaining it.

as far as the quarterly numbers on ROA is concerned, we have touched the number of 0.98% in March '25 on the ROA side. So we wanted to touch 1%. We narrowly missed that number, but, nonetheless, we are well in target to that. And if you see sequentially, our ROA, it has been improving in the last four quarters... Definitely, within the Top Management side, we are targeting that we should touch the ROA of 1% as soon as possible and sustain it at that number in the ensuing quarters.

Risks & concerns

  • NIM compression due to interest rate cycle and competition

    medium

    Margins will be under pressure, necessitating a focus on non-interest income and recoveries.

    Management acknowledged

  • CASA ratio decline

    medium

    CASA percentage declined to 40% from 43% in March '24, with management committed to protecting it at ~40%.

    Analyst acknowledged

Q&A highlights

6 direct, 1 evasive
NBFC book composition and asset quality Direct
This Rs.88,000 crore constitutes three components. One is the domestic NBFC book, which is Rs.71,000 crore. Then there is international NBFC book, which is Rs.9,600 crores. And then there is a Treasury book of NBFC, which is Rs.7,600 crores... A rated and above, accounts constitute 98% of the outstanding.

Provides granular detail on the NBFC book, its quality, and composition, which is a key area of investor focus given recent RBI concerns on NBFC exposure.

Asked by Mr. Ashok Ajmera

Impact of NARCL SR revaluation on profit Direct
due to the RBI circular on the NARCL, that figure is at around, Rs.350 crore... Sir, it is Rs.397.76 crore. It is mentioned in point no. 3 in Notes to Accounts. OK. It is near to Rs.400 crore. Exactly, so entire money has not been taken into the P&L. It's a 50:50 ratio which is there.

Clarifies the specific amount of profit from NARCL SR revaluation and its accounting treatment, indicating it's a one-time gain and not fully recognized in P&L.

Asked by Mr. Ashok Ajmera

Guidance on future profitability metrics (RoA) Direct
So Return on Assets, if you see our numbers, our ROA was 0.70% in March ‘24, which has now improved to 0.90%. Right? And, as far as the quarterly numbers on ROA is concerned, we have touched the number of 0.98% in March '25 on the ROA side. So we wanted to touch 1%. We narrowly missed that number, but, nonetheless, we are well in target to that.

Provides clear RoA trajectory and a near-term target, indicating management's focus on improving profitability.

Asked by Mr. Nitin Dharmawat, Aurum Capital

Reason for decline in Yield on Advances QoQ Direct
if you see on the quarter basis, sequentially, it has come down from 8.55% in December 24 to 8.27% in March ‘25. The simple reason for that is, again, because of the fact that, from February onwards, the Repo rate cut happened. You are aware. And in this Q4 itself, immediately after the Repo cut, our book, which is nearly 50% of our book, which is external benchmark against the Repo, immediately on the next day, the 25 basis cut came, for our book.

Explains the specific reason for QoQ yield compression, linking it directly to RBI's Repo rate cut and the bank's EBLR-linked loan book.

Asked by Mr. Ashlesh, Kotak Securities

Status and risk of State Government accounts under SMA Direct
Our, corporate SMA, which is there, which constitute four State Government accounts. And, either they are in SMA-1 or SMA-0. None of them is SMA-2 also as on 31st March 2025, and we are very confident that they would not slip... all of them are secured loans. And another additional point is that all the four accounts which are there of that State Government, they are all State Government guaranteed. So, we do not foresee any delinquency coming in those accounts.

Addresses a potential asset quality concern by providing reassurance on the security and guarantee of the SMA-flagged State Government accounts.

Asked by Mr. Ashlesh, Kotak Securities

Strategy for corporate credit growth given competition Direct
we are totally open while we are doing corporate advances. If the yields are good, corporate is good, and we are able to get good profit out of that account and good income out of that account, we are totally open to funding that corporate. We have no issues with that... we have opened 20 Emerging Corporate Credit Branches. That is for that specific reason only we have started those branches to have a portfolio in Bank of India with respect to Mid Corporate or Emerging Corporate customers who can be future corporates.

Clarifies the bank's nuanced approach to corporate lending, prioritizing profitability and opening new channels (Emerging Corporate Credit Branches) rather than just chasing market share.

Asked by Mr. Ashok Ajmera

Mismatch on specific provisions / contingent or non-specific provisions Evasive
For this, we will be responding to that separately on a one to one basis.

Indicates an area where management was unwilling to provide public clarification, suggesting potential complexity or sensitivity around provisioning.

Asked by Mr. Jay

2 min read 7 chapters

Detailed narrative

Strong Financial Performance in FY25

Bank of India reported a robust financial year 2025, with net profit surging 46% YoY to Rs.9,219 crores and operating profit increasing 17% YoY to over Rs.16,000 crores. Global advances grew 13.74% to Rs.6,66,000 crores, while RAM advances, a key focus area, expanded 18.37% to Rs.3,23,000 crores, now comprising 57% of the total advance book.

Improved Asset Quality

The bank demonstrated significant improvement in asset quality, with the Gross NPA ratio reducing by 171 basis points to 3.27% and Net NPA ratio improving by 40 basis points to 0.82% in FY25. The Provision Coverage Ratio (PCR) also strengthened to 92.39%, up from 90.59% in FY24, indicating better provisioning adequacy. The slippage ratio for FY25 was 1.36%, with Q4 FY25 at 0.32%.

NIM Pressure and Strategic Response

Global Net Interest Margin (NIM) for FY25 stood at 2.82%, a decline from 2.97% in FY24, with Q4 FY25 yield on advances falling to 8.27% from 8.55% in the previous quarter due to Repo rate cuts impacting EBLR-linked loans. In response, management is strategically focusing on enhancing non-interest income, which grew 48% YoY to Rs.8,994 crores in FY25, and maintaining strong recoveries from written-off accounts, totaling Rs.2,300 crores in FY25.

Digital Transformation and Efficiency

Bank of India is heavily investing in technology, with a budget of Rs.2,000 crores for FY26, following Rs.1,700 crores spent in FY25. Digital initiatives have led to a digital loan book of Rs.80,000 crores, representing 12% of global advances, and generated over Rs.300 crores in income from transaction banking and debit mandates in FY25. The bank has also streamlined 29 digital journeys on the IT side, up from 22 last year, enhancing operational efficiency and customer experience.

CASA Management and Deposit Growth

While the CASA ratio saw a slight dip from 43% in March '24 to 40% in March '25, the bank managed to grow absolute CASA by over Rs.10,000 crores YoY to Rs.2.80 lakh crores. Global deposits increased 10.65% YoY to Rs.8,16,000 crores. Management is committed to protecting the CASA percentage at around 40% in FY26 and is focusing on retail term deposits and low-cost deposit mobilization to manage the cost of funds.

Targeted Corporate and MSME Lending

The bank is pursuing a selective approach to corporate lending, prioritizing higher-yielding MCLR-linked loans over EBLR-linked AAA/AA rated exposures, aiming for double-digit corporate book growth in FY26. It has opened 20 Emerging Corporate Credit Branches to target mid-corporate and emerging clients. MSME GNPAs reduced from Rs.10,000 crores to Rs.7,500 crores, attributed to robust growth in the MSME book, improved underwriting, and enhanced collection efficiencies through dedicated centers.

RoA Improvement and Future Outlook

The Return on Assets (RoA) improved significantly from 0.70% in FY24 to 0.90% in FY25, reaching 0.98% in Q4 FY25. Management has set a clear target to achieve and sustain an RoA of 1% in the ensuing quarters. The bank projects global advances growth of 12-13% and global deposit growth of 11-12% for FY26, with a continued emphasis on asset quality and profitability.

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