Challenges persist- Key highlights from our interaction with Bank of India’s (BOI) management :: HDFC Securities

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Sell PFC Ltd & Bank of India -Short term Sector Momentum Stock Pick 09 Dec - HDFC Sec

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Motilal Oswal Securities Reports on Bank of India

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Angel Broking : Result Update: Bank of India - 2QFY2015

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Core remains weak - BOI :: HDFC Sec

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Bank of India - Operationally stabilising; NPAs to be watched • :: ICICI Securities, PDF link

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Bank of India (BOI) :: Angel Broking Diwali Top Picks (Diwali Muharat)

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Technicals: Bank of India, Carborundum, Hindustan Copper, Hindustan Zinc, Reliance Industrial Infrastructure, Deepak Fertilizers :: Business Line

Asset quality concerns refuse to die- BoI :: Centrum

Asset quality concerns refuse to die
BoI’s Q3FY13 core performance came largely in line though bottom-line
performance was below our expectations led by a spike in provisions. Though
slippages eased QoQ, it remained high at ~2% but was offset by aggressive
write-offs, optically improving %GNPA. We maintain Neutral rating with our
revised fair value estimate on the stock as we expect the stock to
underperform the sector and broader markets due to volatility in the asset
quality matrix.
NIM stable QoQ: The in line NII performance (up 11.7% YoY) was driven by a
sequentially flattish NIM along with 15.5% advances growth YoY. NIM stood
flattish QoQ as the benefit of lower cost of funds was offset by 35bps
contraction in loan yields (due to interest income reversal). While NIM can
improve in quarters to come, big-ticket restructuring or slippages remain a
key risk. We retain our conservative NIM assumptions (10 bps contraction over
an already weak NIM in FY12).
Asset quality, a mixed bag: Asset quality matrix remained a mixed bag with
%GNPA coming off by 34bps QoQ though led by high write offs (explaining
spike in provisions as well). The slippage rate at 1.9%, though lower than ~7% in
the previous quarter, is still high. Standard restructured assets now form 6.5% of
global loans though domestic restructured assets as % of domestic advances is
high at 8.4%. We maintain our view that the restructured assets are likely to rise
further in quarters ahead, though the quantum may be lesser. The management
once again exuded confidence over improving asset quality matrix though we
remain cautious.

Bank of India - Q3FY13 result:: Microsec Research

Bank of India Ltd has announced its Q3FY13 result on 28^th January 2013.

The bank’s total income increased by 5.03% QoQ and 11.16% YoY to INR3245.62 crores, driven by YoY growth in its Net Interest Income (NII) and Other Income by 11.65% and 9.97% respectively. Whereas, Profit After Tax (PAT) increased by 166.19% QoQ and 12.19% YoY to INR803.48 crores. During the quarter,bank has decreased its Provisions by 41% QoQ to INR915.78 crores, which has boosted its bottom line.

Bank's loans book and total deposits expanded by 20.03% and 13.63% YoY to INR276486.36 and INR349117.09 crores respectively. On the asset quality front, the bank’s has improved its asset quality. GNPA and NNPA decreased by 34 and 7bps  QoQ to 3.08% and 1.97% respectively. Moreover, bank’s low cost deposits portfolio (CASA) also improved by 107bps QoQ and 143bps YoY to 33.84%. On the margin front,  Net Interest Margin (NIM) improved by 8bps QoQ while, decreased by 5bps YoY to 2.50%. Capital Adequacy Ratio (CAR) stood at 10.59%, which is 1.59% higher than the regulator stipulated norm.

Q3’13 (INR Crores)	Consensus	Actual	Variance %
Total Income	2571.2	3245.62	26.23%
PAT	603.5	803.48	33.14%

Bank of India Ltd Quarterly-[INR-Crores]
DESCRIPTION	Q3'13	Q2'13	Q3'12	QoQ%	YoY%
Interest Earned	8022.69	8005.46	7150.12	0.22	12.20
Interest Expended	5714.21	5809.50	5082.57	-1.64	12.43
NII	2308.48	2195.96	2067.55	5.12	11.65
Other Income	937.14	894.09	852.15	4.81	9.97
Total Income	3245.62	3090.05	2919.70	5.03	11.16
Operating Expenses	1389.83	1235.99	1187.81	12.45	17.01
Operating Profit before Prov.& Cont.	1855.79	1854.06	1731.89	0.09	7.15
Provisions and Contingencies	915.78	1552.11	693.07	-41.00	32.13
PBT	940.01	301.95	1038.82	211.31	-9.51
Tax	136.53	0.10	322.67	136430.00	-57.69
Profit After Tax	803.48	301.85	716.15	166.19	12.19
Adj Calculated EPS	14.00	5.26	12.46	166.16	12.36
Advances	276486.36	256147.90	230354.64	7.94	20.03
Deposits	349117.09	332694.67	307252.24	4.94	13.63
	Q3'13	Q2'13	Q3'12	QoQ (bps)	YoY(bps)
Capital Adequacy Ratio Basel II	10.59%	11.10%	11.18%	-51	-59
% of Net NPAs	1.97%	2.04%	1.78%	-7	19
% of Gross NPAs	3.08%	3.42%	2.74%	-34	34
CASA%	33.84%	32.77%	32.41%	107	143
NIM %	2.50%	2.42%	2.55%	8	-5
C/D ratio	79.20%	76.99%	74.97%	220	422
C/I Ratio	42.82%	40.00%	40.68%	282	214
OI/TI	57.18%	60.00%	59.32%	-282	-214

Regards,

Team Microsec Research

QUERY CORNER - L and T Finance, Sintex, Nakoda, Bank of India, Glodyne, Orchid Chem:: Business Line

 

Bank of India - TP: INR340 Neutral :: Motilal Oswal

Asset quality volatile; focus on de-bulking balance sheet
Highlights of FY12 Annual Report
 Net slippages increased significantly from INR9.8b in FY11 to INR37b in FY12. However,
aggressive write-offs (INR24b v/s INR8.1b) helped to contain GNPA increase.
 In FY13, Bank of India (BOI) intends to continue focusing on de-bulking its balance
sheet. It expects the Retail and SME segments to drive loan growth.
 Infrastructure and Electricity constituted 22% of its incremental funded exposure,
and is at 11% of overall exposure.
 Foreign currency translation reserve stood at INR9.6b (INR17/share).
 Concerns over macro-economic environment and higher proportion of stress loans
compared to peers will keep valuations under check. Maintain Neutral.

Technical Analysis: Cadila, Gujarat Gas, Bank of India, Pidilite, NIIT tech, Lovable Lingerie, : Business Line,

Angel Broking - Bank of India - RU4QFY2012 - Result Updates :PDF Link

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Bank of India - RU4QFY2012

Bank of India Target Price (INR) 455 Other income and low opex drives profitability: Avendus,

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Rise in other income, sequential NIM expansion and decline in
operating expenses led to c93% y‐o‐y growth in the net profit in the
Mar12 quarter. Other income was driven by recovery from written‐off
accounts. Domestic NIM expanded 43‐bp sequentially to 3.29%. Gross
NPL and net NPL ratios declined for the second consecutive quarter up
to 40‐bp sequentially. Restructured loans increased c31% q‐o‐q to
INR179bn, 7.1% of the total loans. We raise our FY13f PAT forecast by
up to 27% to factor in lower NPL provisions and operating expenses.
We rollover the TP to Mar13 and raise it by 8% to INR455. The TP
values BOI at 1.1x the one‐year forward adjusted book value. We
upgrade the rating to Buy. Higher‐than‐estimated incremental NPL and
NPL provisions are the key risks.
Other income and decline in operating expenses drive net profit
Other income growth of c17.5% y‐o‐y was largely driven by strong recovery in
the written‐off accounts, amounting to INR1.9bn (107% y‐o‐y). Furthermore,
operating expenses fell c24.5% to drive the c93% growth in the net profit. The
43‐bp q‐o‐q rise in domestic NIM to 3.29% was led by a 33‐bp rise in yield on
domestic loans. Savings deposits growth continued to moderate at 13% y‐o‐y.
However, CASA ratio (domestic) improved 60‐bp sequentially, mainly due to
the moderation in term deposits growth. Domestic loan growth (7% y‐o‐y)
continued to decelerate due to a slowdown in the corporate segment and rose
7.4% y‐o‐y, while retail (15% y‐o‐y) and agri (33% y‐o‐y) grew faster.
Strong recovery coupled with low slippage drives fall in NPL ratios
Gross NPL and net NPL ratios dropped sequentially by 40‐bp and 31‐bp to
2.34% and 1.47%, respectively. Slippages declined c27% q‐o‐q to INR3.8bn
(0.6% of annualized loans). However, outstanding restructured loans increased
sequentially by c31% to INR179bn. Restructured loans, as a percentage of gross
loans, were 7.1% at the end of Mar12. We lower our assumption for
incremental NPL up to 20‐bp and reduce the NPL provisions forecast for FY13f–
FY14f. However, NPL ratios are forecast to rise in FY13f.
Raise net profit forecast up to 27% for FY13f–FY14f
We raise our FY13f–FY14f net profit forecast up to 27%, driven by lower NPL
provisions and operating expenses. We have reduced our assumption for
growth in the average pay per employee by up to 5% for the period. While we
lower our assumption for incremental NPL by up to 20‐bp to 60‐bp, it remains
above that in FY12. The NPL provision‐to‐asset is estimated at 49‐bp during
FY13f–FY15f (above the last two years’ average at 45‐bp).
TP values BOI at 1.1x one‐year forward P/B
Large improvement in the asset quality during the Mar12 quarter is likely to
drive the near‐term outperformance. We rollover the TP to Mar13 and raise it
to INR455. The TP values BOI at 1.1x the one‐year forward book value. We
upgrade the rating to Buy. Higher‐than‐estimated incremental NPL due to large
restructured loans and NPL provisions are key risks.

Bank of India - Gone case : Macquarie Research

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Bank of India
Gone case
Event
 Reiterate Underperform: We expect BOI’s ROE to come down from 16% in
FY11 to 12% by FY14E driven by lower ROA and leverage. Maintain
Underperform with a revised TP of Rs255.
Impact
 Asset quality pains to come over again: Although asset quality has shown
some improvement in 3Q12, several concerns still remain. BOI’s exposure to
the power sector (SEB and private power projects 5% each) and Aviation
(mainly Kingfisher, which has already restructured once and is having
difficulty servicing interest); chances of it slipping into an NPL are increasing
(BOI has ~Rs6bn exposure). In addition, slippages could increase in coming
quarters from stressed sectors like SME, iron & steel, construction and sugar.
 Stressed assets to net-worth to cross 100% by FY13E. Restructuring
picked up considerably in 3Q12 and has already reached 6% of overall loans.
We expect the trend to continue, as indicated by the management in looking
at the pipeline of applications for restructuring and stress in the economy. We
estimate stressed assets to net-worth to shoot up and cross the alarming level
of 100% by FY13.
 Loans and fees growth to slow: Overall advances grew by 20.9% YoY in
Dec’11; however, domestic advances performed dismally with 8.2% growth.
We expect loan growth to moderate considerably for the remainder of FY12
and estimate a 17% CAGR in loans over FY12-14E. This is likely to put
pressure on fees as well.
 Poor NPA coverage to drag earnings: The reported provision coverage
ratio as of Dec’11 stood at 36% (61% including technical write-offs), one of
the poorest in the sector. The average slippage ratio over the past three years
(FY09-YTDFY12) has remained above 2.5%. An increase in slippages with a
slowing economy going forward would compel the bank to stiffen credit costs
as there is little room available to reduce PCR. This in turn would drag ROA.
Earnings and target price revision
 We have reduced our FY13E and FY14E earnings by 17% and 20% on
account of the increase in credit cost. We reduce our TP by 7% to Rs255 on
account of lower ROA and lower adjusted book value
Price catalyst
 12-month price target: Rs255.00 based on a Gordon growth methodology.
 Catalyst: Increase in NPLs and restructured assets
Action and recommendation
 Maintain Underperform, Management change in the near term adds to
uncertainty: The current CMD Mr. Misra retires in August 2012. Management
changes at PSU banks have been quite disruptive at times and we remain
cautious on the stock. Reiterate Underperform with TP of Rs255.

Technicals: Dena Bank, Bank of India, India Cements, Oil India, Nucleus Software, LKP, Zandu Realty ::Business Line,

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Kindly advise on the future prospects of Dena Bank bought at Rs 78 and Bank of India at Rs 475. Please give short- and medium-term targets.

V. Karthik,

J.H. Krishnamurthy

Dena Bank (Rs 94.2): The stock found support at around Rs 48 in early January 2012 and started to move upwards. Since then, Dena Bank stock has been on a medium-term uptrend. The stock has almost doubled from its January low. After retracing 50 per cent of its prior downtrend from November 2010 peak of Rs 151 to January low at around Rs 48, the stock is now facing resistance at Rs 100. This is a long-term significant resistance level for the stock and, therefore, it would be little difficult to breach it in the first attempt. Failure to move above Rs 100 will be cue for short-term investors to take partial profits off the table.

Those with a medium-term perspective can prolong their holdings with stop-loss at Rs 70. Key support at Rs 85, Rs 80 and Rs 72 can cushion the stock on declines. Strong breakthrough of Rs 100 will give a medium-term price target of Rs 110 and Rs 122.

Hold Bank of India; Target : Rs 331 ::ICICI Securities

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L a r g e   r e s t r u c t u r e d   b o o k   t o   w e i g h   o n   P A T …
Net profit surged to | 715 crore, up  45% QoQ, much above the estimated
| 532 crore. Lower provisions at | 693 crore in Q3FY12 vs. | 1154 crore in
Q2FY12 and our estimated | 744 crore, resulted in higher profit growth.
Non interest income came strong at | 852 crore growing 31% YoY due to
robust recoveries of | 185 crore. The saga of GNPA addition continues
with net | 520 crore of fresh slippages, mainly factoring aviation sector.
Restructured assets (RA) increased further from |11115 crore  to | 13673
crore (5.94% of advances) with | 3000 crore fresh restructuring coming
from one large telecom infra account and a media company. Around 23%
of RA has already slipped to NPA  and further restructuring cannot be
ruled out keeping the NPA uptick  on and with higher provisions
continuing. We have revised our PAT estimates by ~10% for both FY12E
and FY13E factoring in higher provisions from restructured assets, raising
non interest income and lowering operating expenses as the cost to
income ratio has improved to ~40% from 44% in Q1 and 47% in Q3FY11.
ƒ Asset quality pressure continues, incremental slippages lower…
On a sequential basis, GNPA declined to | 6386 crore from | 6548
crore and the ratio improved to 2.74% from 3.02% as recoveries
and upgrades remained strong. NNPA also improved to | 4093 crore
at 1.78% from 1.98%. We expect slippage ratio of 1.9% against 2%
earlier and estimate GNPA @ 2.4% and NNPA @ 1.3% by FY13E.
ƒ International credit leads to 19.5% jump in global advances…
While domestic advances grew 8% YoY and 3.5% QoQ, foreign
loans grew 60% YoY and 13% QoQ leading to total credit growth of
21.67% to | 230354 crore (overseas book - 29% of global advances).
Impact of rupee depreciation is close to 20%. Deposits increased
2.7% QoQ (21.7% YoY) to | 299074  crore. Hence, NII grew 4.1%
YoY and 8.6% QoQ to | 2068 crore while NIM maintained its
improving trend rising 11 bps  QoQ to 2.55%, from 2.44% in
Q2FY12. Retail and SME credit growth aided NIM increase. We
expect reported NIM to stabilise at 2.5-2.6% for FY12E.
V a l u a t i o n
We expect the adjusted book value to remain suppressed due to higher
NPAs and restructured book at 5.94% of advances. Even Tier I Capital at
7.65% will impact growth. RoA at 0.8% and RoE at 17% for FY13E restrict
the valuation to 1.2x FY13E ABV. We maintain our target price of | 331
and our HOLD rating on the stock.

Bank of India Reco: REDUCE CMP: Rs 353 Target Price: Rs 320 :Emkay,

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Bank of India

Reco: REDUCE

CMP: Rs 353

Target Price: Rs 320

Valuations running ahead of fundamentals
·      BOI’s Q3FY12 PAT at Rs7.2bn ahead of estimates driven by higher than expected NII at Rs20.7bn and higher than expected recoveries (3x yoy and 2x qoq)

·      Loans grew aggressively 6.2% qoq led by foreign (weak INR) and sharp growth in retail+agri (7.6% qoq), CRE (11% qoq) and infrastructure (20% qoq)

·      Though reported slippages came off sharply to Rs5.2bn, it is net of some recoveries. Actual gross slippages ~Rs8-9bn. Sharp rise in restructuring ex-GTL at Rs17.6bn

·      Net NPL/networth still stands at 21%, RoAs may still not look beyond 1% in FY13E due to elevated credit costs. Downgrade to REDUCE with TP of Rs320

Bank of India :UBS India – Least Preferred Stock Ideas for 2012

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Bank of India
Investment case: We are cautious on Bank of India as the bank’s exposure to
potentially stressed sectors is high compared to the other banks under our
coverage. Its volatile loan recovery trends and provisioning coverage of around
59% do not provide comfort on its ability to manage the potential stress ahead.
We expect loan loss provisioning to increase from 66bp in FY11 to 95bp in
FY12-13. We forecast an earnings CAGR of 5.6% in FY11-13.
Valuation: We value the stock using a residual income method. Our price target
implies 0.9x FY12E book and 6.7x FY12E earnings.


2012 Catalysts: We believe a sustained economic slowdown and higher loan
restructuring could pose further downside risk to the share price.




read details and other companies in list (click link below)
UBS India – Outlook 2012 ::Most & Least Preferred Stock Ideas for 2012