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A s s e t q u a l i t y s t r e s s v i s i b le , r e s t r u c t u r i n g r i s e s …
A significant rise of 70% YoY in non interest income booked in all
segments, i.e. portfolio gains, forex as well as fee income led to net profit
growing 20% YoY to | 1289 crore despite higher provisions. Margins
declined 8 bps QoQ to 2.99% from 3.07%. Asset quality surprised
negatively. Deposits grew 24% while advances grew 26% YoY slightly
ahead of our estimates mainly due to international book growth of 45.8%
YoY. However, we continue with our 20% growth in credit and deposit for
FY12E. We estimate 16% CAGR in PAT over FY11-13E to | 5681 crore.
ƒ Asset quality surprises negatively, provisions surge…
GNPA increased to | 3895 crore from | 3402 crore sequentially.
Slippages were at ~| 920 crore and increased mainly due to
aviation sector NPAs. Also, the restructured book grew by | 2116
crore QoQ in absolute terms and increased to 3.8% of the loan book
due to one large telecom infra player getting restructured. Nearly
13% of restructured assets have slipped to NPA till date. These
restructured assets (RA) comprise 65% wholesale banking, 20%
SME, 9% agriculture and 6% retail. Hence, NNPA rose to | 1325
crore from | 1118.6 crore rising to 0.51% from 0.47%. Asset quality
is expected to remain under stress. Hence, we have factored in
GNPA and NNPA reaching 1.6% and 0.5%, respectively by FY13E.
Provisions grew 175% YoY to | 837 crore marred by higher
slippages, provision on RA of ~| 150 crore and | 78 crore of
increased prudential provisions on secured sub standard assets to
20% vs. 15% (as per RBI) to maintain PCR above 80%.
ƒ Non interest income growth supports bottomline…
Non interest income surged 70% YoY to | 1149 crore though core
commission fee based income grew only 20% YoY to | 293 crore.
Some withdrawals for MF investments led to gains of ~| 300 crore
leading to trading gains of | 385 crore from | 85 crore in Q3FY11.
Forex income also grew to | 240 crore vs. average of ~| 140 crore
every quarter.
V a l u a t i o n
Though NPA concerns have risen, we expect BoB’s strong profitability
record to enable it to maintain profit growth of 16% CAGR with RoE and
RoA above 20% and 1.2%, respectively. We maintain our TP of | 954
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
A s s e t q u a l i t y s t r e s s v i s i b le , r e s t r u c t u r i n g r i s e s …
A significant rise of 70% YoY in non interest income booked in all
segments, i.e. portfolio gains, forex as well as fee income led to net profit
growing 20% YoY to | 1289 crore despite higher provisions. Margins
declined 8 bps QoQ to 2.99% from 3.07%. Asset quality surprised
negatively. Deposits grew 24% while advances grew 26% YoY slightly
ahead of our estimates mainly due to international book growth of 45.8%
YoY. However, we continue with our 20% growth in credit and deposit for
FY12E. We estimate 16% CAGR in PAT over FY11-13E to | 5681 crore.
ƒ Asset quality surprises negatively, provisions surge…
GNPA increased to | 3895 crore from | 3402 crore sequentially.
Slippages were at ~| 920 crore and increased mainly due to
aviation sector NPAs. Also, the restructured book grew by | 2116
crore QoQ in absolute terms and increased to 3.8% of the loan book
due to one large telecom infra player getting restructured. Nearly
13% of restructured assets have slipped to NPA till date. These
restructured assets (RA) comprise 65% wholesale banking, 20%
SME, 9% agriculture and 6% retail. Hence, NNPA rose to | 1325
crore from | 1118.6 crore rising to 0.51% from 0.47%. Asset quality
is expected to remain under stress. Hence, we have factored in
GNPA and NNPA reaching 1.6% and 0.5%, respectively by FY13E.
Provisions grew 175% YoY to | 837 crore marred by higher
slippages, provision on RA of ~| 150 crore and | 78 crore of
increased prudential provisions on secured sub standard assets to
20% vs. 15% (as per RBI) to maintain PCR above 80%.
ƒ Non interest income growth supports bottomline…
Non interest income surged 70% YoY to | 1149 crore though core
commission fee based income grew only 20% YoY to | 293 crore.
Some withdrawals for MF investments led to gains of ~| 300 crore
leading to trading gains of | 385 crore from | 85 crore in Q3FY11.
Forex income also grew to | 240 crore vs. average of ~| 140 crore
every quarter.
V a l u a t i o n
Though NPA concerns have risen, we expect BoB’s strong profitability
record to enable it to maintain profit growth of 16% CAGR with RoE and
RoA above 20% and 1.2%, respectively. We maintain our TP of | 954
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