Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bank of Baroda
Maintains its shine
In FY11, BOB further improved on its core earnings momentum. The focus on
margin improvement and stable asset quality drove RoAs higher to 1.3% in FY11.
We expect ROAs to remain stable from now on and earnings should thus trail
business growth. We maintain Buy and raise our TP to Rs1,191 (from Rs1,154).
4QFY11: Adjusted for exceptionals, operating performance remains strong
Net interest income, excluding Rs2.5bn one-off interest on income tax refund, increased 35%
yoy (up 3% qoq) on the back of 31% yoy loan growth (up 10% qoq). The reported global net
interest margins (NIMs) rose 48bp yoy to 3.45% in 4QFY11 (up 25bp qoq). Treasury gains
were 8.9% of PBT in 4QFY11 (7.9% in FY11 vs 17.1% in FY10). The total second pension
option liability is Rs23.8bn. Of this, Rs5.5bn pertaining to retired employees is charged off in
FY11. Further, of the balance Rs18.3bn liability towards existing employees, the bank has
charged off Rs3.7bn (one-fifth) in FY11. This explains the steep rise in staff costs qoq. The
tax rate was 4.5% in 4QFY11, but the effective tax rate was 25% in FY11 vs 28% in FY10.
FY11: Sharp improvement in NIMs leads to better quality of ROAs
In FY11, NIM improved 40bp yoy to 2.8% of average assets. Both fees and other non-interest
income to assets declined 10bp yoy. Operating costs to assets was largely stable at 1.5%,
resulting in operating profit to assets of 2.2%. Provision to assets increased 10bp yoy to 40bp. The
effective tax rate was largely stable and, on balance, this resulted in about 10bp improvement in
ROAs to 1.3%. Incremental slippages declined from 113bp in FY10 to 106bp in FY11. However,
slippages increased by 20bp qoq to 40bp of average loans in 4QFY11, further restructured loans
increased by 11% qoq to Rs 67.1bn (2.9% of loan book).
Overseas business
Overseas business constituted 26% of the loan book as of March 2011 (24.7% as of March
2010) and contributed about 32% to the bank’s core fee income in FY11 (36% in FY10).
Further, NIMs in the overseas business improved 11bp yoy to 1.41% in 4QFY11 (stable
qoq). GNPLs were 0.62% of loans in the overseas operations as of March 2011 (0.47% as of
March 2010).
Change in estimates; maintain Buy
We increase our FY12-13F net profit by about 10-11%, largely driven by better-thanexpected
net interest income and asset growth. We maintain Buy and raise our target price
to Rs1,191, partly because of earnings revision. At our target price, the stock would trade at
2.0x FY12F adjusted BV and 9.0x FY12F earnings
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bank of Baroda
Maintains its shine
In FY11, BOB further improved on its core earnings momentum. The focus on
margin improvement and stable asset quality drove RoAs higher to 1.3% in FY11.
We expect ROAs to remain stable from now on and earnings should thus trail
business growth. We maintain Buy and raise our TP to Rs1,191 (from Rs1,154).
4QFY11: Adjusted for exceptionals, operating performance remains strong
Net interest income, excluding Rs2.5bn one-off interest on income tax refund, increased 35%
yoy (up 3% qoq) on the back of 31% yoy loan growth (up 10% qoq). The reported global net
interest margins (NIMs) rose 48bp yoy to 3.45% in 4QFY11 (up 25bp qoq). Treasury gains
were 8.9% of PBT in 4QFY11 (7.9% in FY11 vs 17.1% in FY10). The total second pension
option liability is Rs23.8bn. Of this, Rs5.5bn pertaining to retired employees is charged off in
FY11. Further, of the balance Rs18.3bn liability towards existing employees, the bank has
charged off Rs3.7bn (one-fifth) in FY11. This explains the steep rise in staff costs qoq. The
tax rate was 4.5% in 4QFY11, but the effective tax rate was 25% in FY11 vs 28% in FY10.
FY11: Sharp improvement in NIMs leads to better quality of ROAs
In FY11, NIM improved 40bp yoy to 2.8% of average assets. Both fees and other non-interest
income to assets declined 10bp yoy. Operating costs to assets was largely stable at 1.5%,
resulting in operating profit to assets of 2.2%. Provision to assets increased 10bp yoy to 40bp. The
effective tax rate was largely stable and, on balance, this resulted in about 10bp improvement in
ROAs to 1.3%. Incremental slippages declined from 113bp in FY10 to 106bp in FY11. However,
slippages increased by 20bp qoq to 40bp of average loans in 4QFY11, further restructured loans
increased by 11% qoq to Rs 67.1bn (2.9% of loan book).
Overseas business
Overseas business constituted 26% of the loan book as of March 2011 (24.7% as of March
2010) and contributed about 32% to the bank’s core fee income in FY11 (36% in FY10).
Further, NIMs in the overseas business improved 11bp yoy to 1.41% in 4QFY11 (stable
qoq). GNPLs were 0.62% of loans in the overseas operations as of March 2011 (0.47% as of
March 2010).
Change in estimates; maintain Buy
We increase our FY12-13F net profit by about 10-11%, largely driven by better-thanexpected
net interest income and asset growth. We maintain Buy and raise our target price
to Rs1,191, partly because of earnings revision. At our target price, the stock would trade at
2.0x FY12F adjusted BV and 9.0x FY12F earnings
No comments:
Post a Comment