X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
BOI: Taking one step at a time - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jul 13, 2001

    BOI: Taking one step at a time

    Bank of Indiaís fourth quarter performance was satisfactory with a growth of 14% in interest income. The bankís bottomline took a hit because of write off for VRS expenses of Rs 3.3 bn.

    BOI is slated to announce its 1QFY01 results in the next week. We have attempted to forecast its quarterly performance based on the industry trend and the bankís restructuring initiatives.

    Due to downturn in the economic activity and a slowdown in the industrial growth, BOI will have less lending opportunities, which will affect its growth in advances. As a result topline of the bank is likely to show a single digit growth. The bank's loan portfolio quality is improving. Share of 'A' rated clients has gone up to 53% in FY01 from 40% in the previous year. This will help the bank in bringing down the ratio of non-performing assets (NPA) to advances.

    Expected performance
    (Rs m) 1QFY00 1QFY01 1QFY02E Change*
    Interest Income 11,390 11,960 12,797 7.0%
    Other Income 1,270 1,490 1,714 15.0%
    Total Income 12,660 13,450 14,511 7.9%
    Interest Expenses 8,220 8,540 8,792 2.9%
    Operating Profit 4,440 4,910 5,719 16.5%
    Other Expenses 3,230 3,650 3,546 -2.9%
    Profit before Tax 1,210 1,260 2,173 72.5%
    Provisions & contingencies 600 600 1,108 84.7%
    Net Profit 610 660 1,065 61.3%
    Equity shares (m) 638 638 638
    * Change over 1QFY01

    Key ratios
    Particulars 1QFY00 1QFY01 1QFY02E
    OPM 27.8% 28.6% 31.3%
    NPM 5.4% 5.5% 8.3%
    EPS (Rs) 3.8 4.1 6.7

    Reduction in number of employees by about 15% to 44,000 is expected to reduce the cost to income ratio of the bank to 54% in FY02 from 56% (excluding provision for VRS) in FY00. This would not only double the profits of the bank but would also improve the productivity ratios of the bank. BOIís revenues per employee and profits per employee at Rs 1.3 m and Rs 0.1 m stand on the lower side compared to its other public sector peers.

    Provision for non-performing assets (NPAs) increased by a marginal 5% in FY01. BOIís provision coverage at about 36% is on the lower side, compared to 57% by SBI, 65% by Corporation Bank and 56% by Bank of Baroda. This has resulted in higher NPA ratio of 6.7%. If the bank increases provision coverage, financials would reflect correct picture.

    At the current market price of Rs 15.7, BOI is trading at a P/E of 2x and Price/Book value ratio of 0.3x FY02 projected earnings. In a bid to reduce the government equity, BOI has decided to return 25% of its equity capital to the Central government. This move will bring down the government holding in the bank to 51% (from 76%). This decision of the bank will help improve shareholder value, as it will increase the per share earnings of the bank.

     

     

    Equitymaster requests your view! Post a comment on "BOI: Taking one step at a time". Click here!

      
     

    More Views on News

    IDFC Bank: Strong Trading Income Shields Credit Slowdown (Quarterly Results Update - Detailed)

    Aug 10, 2017

    IDFC Bank is taking steps to address contracting NIMs and successfully transition in to a retail bank.

    ICICI Bank: Loan Slippages Trending Downwards (Quarterly Results Update - Detailed)

    Aug 10, 2017

    Asset quality will be the key thing to watch out for going forward.

    Axis Bank: Outside Watchlist Slippages a Big Worry (Quarterly Results Update - Detailed)

    Jul 31, 2017

    Almost 74% of the watchlist as provided by the bank of Rs 226 billion in FY16 has turned into non-performing assets.

    HDFC Bank: Asset Quality Deteriorates due to Farm Loan Waiver (Quarterly Results Update - Detailed)

    Jul 25, 2017

    Asset quality was under pressure on account of farm loan waivers. Despite the higher provisioning, the company reported a healthy profit growth of 20%.

    SBI: Merger Pushes up Bad Loans (Quarterly Results Update - Detailed)

    May 23, 2017

    State Bank of India (SBI) ended FY17 on a healthy note but concerns on bad loans from associate banks remain.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    BANK OF INDIA SHARE PRICE


    Aug 16, 2017 (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

    BANK OF INDIA - BANK OF BARODA COMPARISON

    Compare Company With Charts

    COMPARE BANK OF INDIA WITH

    MARKET STATS