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.
BoP: Subdued performance - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Nov 15, 2001

    BoP: Subdued performance

    Bank of Punjab (BoP), a new private sector bank's financials have taken a severe hit in the second quarter of the current fiscal. A sharp rise in operating expenses and a fall in interest margins have resulted in 65% drop in the bank's net profits in 2QFY02.

    (Rs m) 2QFY01 2QFY02 Change
    Interest Income 800 928 15.9%
    Other Income 28 169 493.4%
    Interest Expenditure 547 722 32.0%
    Operating Profit 254 206 -18.8%
    Operating profit margin (%) 31.7% 22.2%  
    Other Expenditure 139 258 85.4%
    Profit before Tax 143 117 -18.2%
    Provisions & contingencies 62 67 8.8%
    Tax 29 31 9.4%
    Profit after Tax/(Loss) 53 19 -64.7%
    Net profit margin (%) 6.6% 2.0%  
    No. of Shares (eoy) 105.0 105.0  
    Diluted Earnings per share* 2.0 0.7  
    P/E (at current price)   17  
    *(annualised)      

    Although, the bank's core business income witnessed a double digit growth, a stiff pressure on interest margins led to a 19% drop in operating profits. While most private sector banks managed to trim a sharp fall in interest margins, BoP's operating margins declined by 950 basis points. With the innovative service offerings by top 3 new private sector banks, BoP is finding tough to reduce cost of deposits.

    During the quarter, the bank's cost to income ratio rose to 69% from 49% in 2QFY01. This negated a triple digit growth in other income figure. The contribution of other income to total income increased to 15% in the current quarter from 3% in the corresponding quarter of the previous year. Private sector banks are exploring the opportunities in forex and non fund based business to improve total income. These stream of revenues are also considered less risky compared to fund based activity.

    At the current market price of Rs 12 BoP is trading at Price/Book value ratio of 0.8x and P/E of 17x 2QFY02 annualised earnings. The bank has the track record of declaring dividend above 10% in the last four years. However, considering the financial performance in the current year, it may not be able to maintain the dividend ratio. This makes the stock unattractive even on the basis of dividend yield.

     

     

    Equitymaster requests your view! Post a comment on "BoP: Subdued performance". 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.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    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

    TRACK BANK OF PUNJAB

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

    MARKET STATS