BOI: OPM fuels profits - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

BOI: OPM fuels profits

May 21, 2002

Bank of India doubled its profits for the year ended March 2002 on the back of a sharp improvement in operating margins. However, the bank's interest income witnessed a single digit growth during the year, due to slowdown in the industrial activity.

(Rs m)4QFY014QFY02ChangeFY01FY02Change
Income from operations 14,069 14,394 2.3% 53,169 56,087 5.5%
Other Income 3,669 4,228 15.2% 8,619 11,033 28.0%
Interest expense 9,660 9,876 2.2% 36,630 37,690 2.9%
Net interest income 4,408 4,518 2.5% 16,538 18,397 11.2%
Other expenses 6,407 4,273 -33.3% 17,437 15,309 -12.2%
Operating Profit (1,999) 245 - (899) 3,088 -
Operating Profit Margin (%)-14.2%1.7% -1.7%5.5% 
Provisions and contingencies 560 3,082450.1% 4,541 7,20158.6%
Profit before Tax 1,110 1,39225.4% 3,179 6,920117.6%
Tax 661 412-37.7% 661 1,831177.2%
Extraordinary items - -36  - -36 
Profit after Tax/(Loss) 449 944110.1% 2,519 5,052100.6%
Net profit margin (%)3.2%6.6% 4.7%9.0% 
No. of Shares (m) 638.0 488.1   638.4 488.1  
Diluted Earnings per share*3.77.7 5.210.4 
P/E Ratio 3.5  2.6 
*(annualised)      

The bank's operating margins increased to 5.5% during the year from a negative 1.7% in the previous year. (In FY01, operating margin stood at 4.5% excluding VRS write off of Rs 3.3 bn). The bank's VRS initiative launched last year, is reflected positively in FY02's financial performance, as its cost to income ratio declined to 52% from 69% in FY01. BOI wrote off Rs 1.4 bn in FY02 towards VRS expenses. which is included in operating expense. BOI's operating margins are expected to improve further by 100 basis points in the next two years.

After having recorded a double digit growth in interest income, the bank's income from both advances and investments slowed down in FY02. Stiff competition from private banks coupled with a downturn in economy impacted the bank's income growth. The growth in fee based income was also lower compared to its peers in the sector. Other income accounted for 16% of total income of the bank.

Income breakup
(Rs m)FY01FY02Change
Interest on advances 31,287 32,929 5.2%
Income from investments 18,057 19,186 6.3%
Interest on balance with RBI 3,577 3,490 -2.5%
Others 247 483 95.1%
Total 53,169 56,087 5.5%

During the year, BOI reduced its capital base by returning equity of Rs 1.5 bn to the government of India in cash. The bank also paid Rs 36 m interest to the government after adjusting for dividend payable. At the current market price of Rs 27, the stock is trading at an adjusted price to book value ratio of 1.3x and P/E of 3x FY02 earnings. In FY02, the bank increased provisions for non-performing assets substantially, which is likely to bring down its net NPA ratio to below 6.5%. Valuations of the bank will be re-rated once its asset quality is improved.

Equitymaster requests your view! Post a comment on "BOI: OPM fuels profits". Click here!

  

More Views on News

5 Indian Banks with the Lowest NPAs. Here's How they Did It... (Views On News)

Sep 27, 2021

These banks have managed to maintain their asset quality even in the middle of a pandemic.

PNB Reports an Over Three-Fold Jump in Net Profit as Provisions Fall (Views On News)

Aug 3, 2021

The reduction in provisions for bad loans and asset quality stability may have aided the lender's earnings.

Here's Why IndusInd Bank's Net Profit Doubled in the June Quarter (Views On News)

Jul 28, 2021

All you need to know about the latest quarterly results of IndusInd Bank.

Axis Bank's Stock Falls as Results Disappoint on Asset Quality (Views On News)

Jul 27, 2021

Axis Bank's net profit more than doubles on a spike in other income and lower provisioning.

ICICI Bank's Quarterly Results Sends Stock to 52-Week High (Views On News)

Jul 26, 2021

ICICI Bank expects to maintain margins at the same level in coming quarter.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

How to Hit Rs 100 Crore Wealth in Your Lifetime (Equitymaster Wealth)

Nov 15, 2021

This is how you can achieve the ambitious goal of a net worth of Rs 100 crore.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

BANK OF INDIA SHARE PRICE


Nov 26, 2021 (Close)

TRACK BANK OF INDIA

  • Track your investment in BANK OF INDIA with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

MARKET STATS