Infomerics Reaffirms Bank of India's Tier II Bonds Rating as IVR AAA/Stable
Maintaining a high and stable credit rating is crucial for Bank of India as it positively influences investor confidence, helps in managing borrowing costs for its Tier II Bonds, and reflects the bank's financial stability and operational improvements. While a reaffirmation is not an upgrade, it signifies continued strength and reliability.
The reaffirmation of a high credit rating (IVR AAA/Stable) by Infomerics Ratings, combined with sustained improvements in earnings profile, asset quality, and comfortable capitalization levels, indicates a strong and stable financial position for Bank of India.
Infomerics Ratings has reaffirmed the rating of Bank of India's (BOI) BASEL III Compliant Tier II Bonds, amounting to ₹1800 crore, at IVR AAA/Stable. The reaffirmation, verified on 20 August 2025, is based on several key strengths and some prevailing constraints:
* Key Strengths: * Sovereign ownership: Government of India holds a 73.38% stake as of 30 June 2025, providing continued support. * Sustained improvement in earnings: Interest income grew approximately 8% year-on-year to ₹18,352 crore in Q1FY26 (April-June 2025), with operating profit increasing approximately 9% year-on-year to ₹4,009 crore. Credit cost decreased to 0.68% as of 30 June 2025. * Diversified loan portfolio: Retail, Agriculture & MSME’s (RAM) segment constitutes approximately 58% of the portfolio, with gross domestic advances growing approximately 11% year-on-year to ₹5,65,297 crore as of 30 June 2025. * Established market reach: BOI has 5,304 domestic branches, 7,986 ATMs & CRA, 23,676 BCs, and 22 overseas branches as of 30 June 2025. * Comfortable capitalization: Common Equity Tier-1 (CET 1) ratio stood at 14.52% and overall Capital Adequacy Ratio (CRAR) at 17.39% as of 30 June 2025. * Healthy resource profile: Current Account and Savings Account (CASA) deposits remained stable at 39.88% as of 30 June 2025.
* Key Weaknesses: * Modest, albeit improving, asset quality: Gross Non-Performing Assets (GNPA) stood at 2.92% and Net Non-Performing Assets (NNPA) at 0.75% as of 30 June 2025, showing improvement from FY25 (GNPA 3.27%, NNPA 0.82%) and FY24 (GNPA 4.98%, NNPA 1.22%). * Moderate growth in deposits compared to advances: Credit-deposit ratio stood at 80.66% as of 30 June 2025, driven by higher growth in gross advances (approximately 12% year-on-year) compared to deposits (approximately 9% year-on-year).
* Financial Performance Highlights (Standalone): * Total Income: ₹79,820 crore in FY25, up from ₹66,805 crore in FY24. * Profit After Tax (PAT): ₹9,219 crore in FY25, up from ₹6,318 crore in FY24. * Total Advances: ₹6,66,047 crore in FY25, up from ₹5,85,595 crore in FY24. * Total Deposits: ₹8,16,541 crore in FY25, up from ₹7,37,920 crore in FY24.
* Capital Raising Plan: BOI has a capital raising plan of ₹5000 crore in FY26, comprising ₹2500 crore through Additional Tier I Bonds and ₹2500 crore through Tier II Bonds.
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