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Bank of India
For 2QFY2012, Bank of India posted a disappointing set of results, with net profit
declining by 20.4% yoy due to a sharp increase in provisioning expenses as the
bank completed the exercise of switchover to system-based NPA recognition during
2QFY2012. Write back of tax provisions amounting to `75cr and recognition of
MAT credit entitlement worth `77cr supported the bottom line.
The bank’s business growth remained slow during the quarter, with advances
declining by 0.3% qoq (up 18.1% yoy) and deposits increasing by 2.0% (up 24.1%
yoy). Domestic CASA ratio improved sequentially to 31.3% in 2QFY2012 from
30.2% in 1QFY2012. Domestic NIM of the bank improved by 34bp qoq in
2QFY2012 (sharp drop of 95bp qoq in 1QFY2012) to 2.8%, on the back of a
sharp uptick in yield on advances (up 85bp qoq) to 11.7% and better yields from
investments (up 45bp qoq) to 8.0% during the quarter. Overall, other income
performance was robust, with fee income growing by 19.6% qoq (up 8.3% yoy)
during 2QFY2012. Recoveries from written-off accounts nearly trebled sequentially
to `88cr, although on a low base. Treasury income gains also rose sharply during
2QFY2012 to `154cr (up 40.7% qoq), while gains from forex transactions
remained flat at `148cr. During 2QFY2012, overall asset quality deteriorated with
annualized slippage ratio rising sharply to 5.3% from 3.2%. During the quarter,
the bank completed the exercise of switchover to system-based NPA recognition,
which contributed to the substantially higher slippages. Management attributed
~58% of the slippages during 2QFY2012 to accounts worth `10lakhs and below.
The bank wrote-off accounts worth `1,596cr during 2QFY2012 (against the usual
run-rate of `150cr-300cr), however management termed these write-offs as ‘soft’
and is expecting 60-65% of these written-off accounts to be recovered over the
next 2-3 quarters. The bank’s provision coverage ratio (including technical writeoffs)
slipped by 763bp qoq to 59.1% as of 2QFY2012. The stock rating is currently
under review.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bank of India
For 2QFY2012, Bank of India posted a disappointing set of results, with net profit
declining by 20.4% yoy due to a sharp increase in provisioning expenses as the
bank completed the exercise of switchover to system-based NPA recognition during
2QFY2012. Write back of tax provisions amounting to `75cr and recognition of
MAT credit entitlement worth `77cr supported the bottom line.
The bank’s business growth remained slow during the quarter, with advances
declining by 0.3% qoq (up 18.1% yoy) and deposits increasing by 2.0% (up 24.1%
yoy). Domestic CASA ratio improved sequentially to 31.3% in 2QFY2012 from
30.2% in 1QFY2012. Domestic NIM of the bank improved by 34bp qoq in
2QFY2012 (sharp drop of 95bp qoq in 1QFY2012) to 2.8%, on the back of a
sharp uptick in yield on advances (up 85bp qoq) to 11.7% and better yields from
investments (up 45bp qoq) to 8.0% during the quarter. Overall, other income
performance was robust, with fee income growing by 19.6% qoq (up 8.3% yoy)
during 2QFY2012. Recoveries from written-off accounts nearly trebled sequentially
to `88cr, although on a low base. Treasury income gains also rose sharply during
2QFY2012 to `154cr (up 40.7% qoq), while gains from forex transactions
remained flat at `148cr. During 2QFY2012, overall asset quality deteriorated with
annualized slippage ratio rising sharply to 5.3% from 3.2%. During the quarter,
the bank completed the exercise of switchover to system-based NPA recognition,
which contributed to the substantially higher slippages. Management attributed
~58% of the slippages during 2QFY2012 to accounts worth `10lakhs and below.
The bank wrote-off accounts worth `1,596cr during 2QFY2012 (against the usual
run-rate of `150cr-300cr), however management termed these write-offs as ‘soft’
and is expecting 60-65% of these written-off accounts to be recovered over the
next 2-3 quarters. The bank’s provision coverage ratio (including technical writeoffs)
slipped by 763bp qoq to 59.1% as of 2QFY2012. The stock rating is currently
under review.
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