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Bank of India
For 1QFY2012, Bank of India reported a weak set of results, with the bottom line declining
by 28.6% yoy to `518cr, well below our as well as street’s estimates. Business growth was
muted, in-line with peers, with advances increasing by just 0.9% qoq (up 21.6% yoy) and
deposits coming off by 1.9% qoq (up 25.4% yoy). CASA deposits registered growth of 14%
yoy on the back of 16% rise in saving account deposits. Global CASA ratio stood at
30.0%. Reported global NIM declined sharply by 75bp qoq to 2.2%. The bank had to
reverse the accrued interest of `175cr on NPAs recognised during the quarter, which
affected NIM by ~25bp. Also the saving account rate hike impacted the NIM by ~12bp.
The asset quality of the bank deteriorated with the annualised slippage ratio for
1QFY2012 rising further to 3.2% from an already high 2.4% in 4QFY2011 and 1.5% in
1QFY2011. Slippages came primarily from the agri portfolio and smaller accounts, which
were migrated to system-based NPA recognition. The bank has migrated accounts above
`5lakh to system-based NPA recognition and will migrate all accounts in 2QFY2012.
Management has guided for higher slippages even in 2QFY2012 but is hopeful of a
recovery in 2HFY2012. The reported provision coverage ratio declined to 66.8% from
72.2% in 4QFY2011.
At the CMP, the stock is trading at 1.1x FY2013E ABV. We maintain our Buy
recommendation on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bank of India
For 1QFY2012, Bank of India reported a weak set of results, with the bottom line declining
by 28.6% yoy to `518cr, well below our as well as street’s estimates. Business growth was
muted, in-line with peers, with advances increasing by just 0.9% qoq (up 21.6% yoy) and
deposits coming off by 1.9% qoq (up 25.4% yoy). CASA deposits registered growth of 14%
yoy on the back of 16% rise in saving account deposits. Global CASA ratio stood at
30.0%. Reported global NIM declined sharply by 75bp qoq to 2.2%. The bank had to
reverse the accrued interest of `175cr on NPAs recognised during the quarter, which
affected NIM by ~25bp. Also the saving account rate hike impacted the NIM by ~12bp.
The asset quality of the bank deteriorated with the annualised slippage ratio for
1QFY2012 rising further to 3.2% from an already high 2.4% in 4QFY2011 and 1.5% in
1QFY2011. Slippages came primarily from the agri portfolio and smaller accounts, which
were migrated to system-based NPA recognition. The bank has migrated accounts above
`5lakh to system-based NPA recognition and will migrate all accounts in 2QFY2012.
Management has guided for higher slippages even in 2QFY2012 but is hopeful of a
recovery in 2HFY2012. The reported provision coverage ratio declined to 66.8% from
72.2% in 4QFY2011.
At the CMP, the stock is trading at 1.1x FY2013E ABV. We maintain our Buy
recommendation on the stock.
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