Bank of India Is the worst behind? HOLD ::Emkay

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Bank of India

Is the worst behind?

HOLD

CMP: Rs328                                        Target Price: Rs320

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n     BOI’s Q2FY12 NII (Rs19bn) marginally ahead of estimates. Higher non-int inc. and tax w/back compensated for higher provisions. PAT at Rs4.9bn (-20% yoy ) below estimates

n     Slippages at Rs45bn (H1FY12) primarily due to system–based NPA recognition and 23% NPA’s from restructured accounts. Management confident of higher recoveries in H2FY12

n     Balance sheet expansion of 1.6% qoq led by 15%/10% qoq growth in foreign deposits/advances. On a contrary, domestic deposits/loans were down 0.4%/2% qoq respectively

n     Net NPL/networth now stands at 23% with Tier I CAR at 8.3% Lowered our estimates by 23%/16% for FY12E/FY13E driven by growth moderation and higher provisions. Maintain HOLD