BSE Index Analysis, Securties , Standard Experts
Bank of India : High Margin, Better Asset Quality Drive PAT
Reco : Buy
Cmp : 353
Target : 398
BOI's Q4 PAT was above our expectation (Rs 9.5 bn v/s Rs 7 bn) led by higher margin and improved asset quality. However, domestic growth disappointed -- advances grew 8% YoY, while deposits declined 2% YoY (domestic business is 75% of total).
Rebalancing of liability mix and change in credit mix (corporate credit share down 600 bps YoY to 41%) led to higher NIM (up 31 bps QoQ to 2.9%). Going forward, we expect stable NIM led by (1) low domestic C-D ratio at 72%; (2) focus on retail and SME loans and; (3) reducing reliance on international advances (28% in FY12).
GNPA decline (8% QoQ) is comforting, however high restructuring of advances (7% share - up 110 bps QoQ) remains a concern. ~65% of FY12 slippages were recovered in current fiscal as monitoring of NPA accounts improved (NPA recognition through CBS). We expect GNPA at 2.4% in FY13/14, higher than the management estimate of 1.6% (to factor in slippages from higher restructuring).
Bank of India : High Margin, Better Asset Quality Drive PAT
Reco : Buy
Cmp : 353
Target : 398
BOI's Q4 PAT was above our expectation (Rs 9.5 bn v/s Rs 7 bn) led by higher margin and improved asset quality. However, domestic growth disappointed -- advances grew 8% YoY, while deposits declined 2% YoY (domestic business is 75% of total).
Rebalancing of liability mix and change in credit mix (corporate credit share down 600 bps YoY to 41%) led to higher NIM (up 31 bps QoQ to 2.9%). Going forward, we expect stable NIM led by (1) low domestic C-D ratio at 72%; (2) focus on retail and SME loans and; (3) reducing reliance on international advances (28% in FY12).
GNPA decline (8% QoQ) is comforting, however high restructuring of advances (7% share - up 110 bps QoQ) remains a concern. ~65% of FY12 slippages were recovered in current fiscal as monitoring of NPA accounts improved (NPA recognition through CBS). We expect GNPA at 2.4% in FY13/14, higher than the management estimate of 1.6% (to factor in slippages from higher restructuring).
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