Bank of India - Q3FY12 Numbers

Bank of India (BOI) reported its Q3FY12 numbers on January 27, 2012. We at DSIJ have analysed the financials of the bank and had also attended the analyst meet which was scheduled by the company on the same day itself. The scrip on Friday had then rallied by 3.17 per cent but has given up its gains to close downwards by 4.78 per cent at Rs 336.

In Q3FY12, BOI’s net interest income increased marginally by 4 per cent to Rs 2,067.5 crore on a YoY basis. However, its non-interest income increased by 31 per cent to Rs 852.2 crore. This was on the back of profit from the sale of securities (treasury) and also due to recovery from the written-off accounts.

The provisions of the bank increased by 38 per cent to Rs 1,015.7 crore on a YoY basis but declined marginally by 4 per cent. This was because last quarter the bank moved to system-driven NPAs and had shifted all its small accounts. Its net profit was up by 9.64 per cent to Rs 716.2 crore on a YoY basis.

The following are the bank’s key financials:

• The net interest margin (NIM) contracted by 54 basis points to 2.55 per cent on a YoY basis. However, it showed an improvement of 11 basis points sequentially. The same is the situation with its asset quality which showed improvement sequentially while it deteriorated on a yearly basis.

• The gross NPAs of the bank increased by 38 basis points to 2.74 per cent on a YoY basis (improved by 28 basis points on QoQ) while the net NPAs of the bank increased by 90 basis points to 1.78 per cent on a YoY basis. It improved by 20 basis points on QoQ.

• As on December 31. 2011, the advances of the bank increased by 21 per cent to Rs 2,33,114.6 crore while the deposits of the bank grew by 21.67 per cent to Rs 3,07,252.3 crore on a YoY basis. The CASA ratio of the bank has remained stable. 

• The capital adequacy ratio (CAR) of the bank stood at 11.18 per cent with Tier 1 CAR at 7.65 per cent.

On the capital infusion front, the management did not give any clear direction about the amount and the timeline for the introduction of fresh capital. The bank’s treasury operation was the only one which performed well during the third quarter and its revenue from this segment increased by 37 per cent to Rs 2,224 crore while the segment made a profit of Rs 475 crore versus a loss of Rs 224 crore in the similar period last year. Retail and wholesale banking showed growth in revenue but witnessed de-growth in its profits.
 
The bank expects its credit growth to be around 16 per cent in the coming quarters. It had posted bad YoY numbers but has shown some improvement if one looks at the results sequentially. The asset quality still remains a key risk for the bank. We believe one should take a cautious approach since there could be some pain left for the bank. Our advice to investors is to wait for a couple of quarters and avoid taking any fresh position in the stock.

The following are the bank key financials: