BOI: Margins continue to rise - 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: Margins continue to rise

Jul 15, 2002

Bank of India (BOI) has declared strong first quarter performance on the back of a sharp improvement in operating margins. The bank's net profits jumped by 47% YoY to Rs 1.8 bn in 1QFY03. Its interest income however, grew at a slower pace of 6% to Rs 14 bn.

(Rs m)1QFY021QFY03Change
Income from operations 13,326 14,122 6.0%
Other Income 1,991 2,864 43.9%
Interest expense 9,211 9,429 2.4%
Net interest income 4,115 4,693 14.0%
Other expenses 3,702 3,762 1.6%
Operating Profit 413 931 125.4%
Operating Profit Margin (%)3.1%6.6% 
Provisions and contingencies 700 1,423103.4%
Profit before Tax 1,704 2,37239.2%
Tax 500 60120.1%
Extraordinary items - - -
Profit after Tax/(Loss) 1,204 1,77247.2%
Net profit margin (%)9.0%12.5% 
No. of Shares (m) 638.0 488.1  
Diluted Earnings per share*9.914.5 
P/E Ratio 2.1 
*(annualised)   

During the quarter, the bank's operating margins increased to 6.6% from 3.1% in the comparable previous year. The bank's VRS initiative launched last year, is reflected positively in 1QFY03's financial performance, as its cost to income ratio declined to 50% from 52% in FY02. BOI wrote off Rs 340 m in 1QFY03 (Rs 400 m in 1QFY02) towards VRS expenses. which is included in operating expense. The bank aims to go for a second round of VRS, which would further improve its efficiency and bring down costs.

The bank's income from both advances and investments slowed down significantly in 1QFY03. Stiff competition from private banks coupled with a downturn in economy impacted the bank's income growth. The bank's core interest income witnessed a marginal rise of 7%. Non-food credit growth is expected to pick up in the current fiscal which could give some boost to this stream of revenues. The growth in fee based income was however strong at 44%, forming 17% of total income.

Income breakup
(Rs m)1QFY021QFY03Change
Interest on advances 8,095 8,635 6.7%
Income from investments 4,395 4,800 9.2%
Interest on balance with RBI 799 685 -14.3%
Others 37 1 -96.5%
Total 13,326 14,122 6.0%

At the current market price of Rs 31, the stock is trading at an unadjusted price to book value ratio of 0.6x and P/E of 2x 1QFY03 earnings. Valuations of the bank will be re-rated once its asset quality and employee productivity improves.

Equitymaster requests your view! Post a comment on "BOI: Margins continue to rise". 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