Bank of India- Pension provisions hurt profit :: Emkay

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Bank of India

Pension provisions hurt profit

ACCUMULATE

CMP: Rs 422                                       Target Price: Rs 510

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n     BOI’s results for Q4FY11 were below estimate driven by Rs7.1bn of pension exp and higher than expected provisions for NPAs

n     NII has grown by 8.9% qoq driven by 12% qoq growth in advances and 14bps qoq expansion in NIMs. Adj for one off NII has decline by 4.9% qoq, albeit NIMs were stable at 2.7%

n     The slippages were sharply up at 1.8%(annualized) for the quarter compared with 1.3% for M9FY11

n     Valuations attractive at 1.3x FY12E/1.1x FY13E ABV. Expect RoAs at 1% despite building 20bps contraction in NIMs and 1.2% slippage. Retain ACCUMULATE with TP of Rs510