Bank of India was the top gainer on the BSE yesterday, closing at Rs.209.90, spurting up after its net profit for Q2FY14 jumped up 106% (YoY) at Rs.622 crore, driven by higher interest income, lower bad loans and better margins. NII rose 15% at Rs.2527 crore and non-NII was up 23%. The jump in net profit was despite the bank taking a treasury hit of Rs 648 crore, of which Rs 466 crore was booked in second quarter.  The Bank restructured loans to the tune of Rs.855 crore compared to Rs.755 crore in Q1. Of this restructured loans in Q2, Rs.247 crore is CDR. In current Q3, the bank expects this figure to go up to Rs.1000-1200 crore.

Total advances jumped 29% (YoY) and deposits increased 30%. The market was more enthused with the improvement in the asset quality, which the market had actually expected to take a hit for the worst. Its gross NPAs was came in lower at 2.93% vs 3.04% (QoQ) and net NPAs was at 1.85% vs 2.10%, this was thanks to lower bad loans and better recovery. This was a much unexpected good performance yet one should remain cautious in the months to come, especially when it comes to PSU banks.