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Narasimhan's review
Investment Sector: Equities Submitted by Narasimhan 
, Owner
at Krish Systems
5 months ago Tags: Lower earnings bank Tight money policy Add Tag |
Bank of India- Q1 FY09 PERFORMANCE
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Bank of India is one of the leading banking companies in India. It was founded in the year 1906 and was nationalized in the year 1969. The bank now has nearly 2900 branches controlled through 48 zonal offices. It also has 27 branches abroad. Last year the bank acquired 76% stake in PT bank Swadesi Tbk, Indonesia. The bank announced its quarterly results recently. They are summarized and tabulated below.
The bank posted net profit of Rs.5619.5 Million an increase of 78% against the net profit of Rs.3152 Million posted in the quarter ended June 30 2008. But on QoQ basis the net profit declined by 25%. The operating profit moved up by 34.47% to Rs.252.4 Billion from Rs.187.4 Billion earned in the corresponding quarter last fiscal. The total deposits at the end of the quarter were at Rs.13156 Billion an increase of 5% on QoQ basis and 33% on YoY basis. Savings bank deposits and current deposits were at Rs.3475 Billion and Rs.1015 respectively. Total CASA accounted for 34% of aggregate deposits. Net interest income soared up to Rs.1181 crore, an increase of 24.7% as against the same quarter last fiscal. The total non interest income rose to Rs.566 crore as against Rs.381 crore earned in Q1 FY09. The profit of about RS.68 crore on the sale of securities and Rs.87 crore recovered in written off accounts boosted up the non interest income level of the bank. Advances grew up by 38.84% to Rs.12288 Billion on YoY basis and 7% on QoQ basis. When compared to Q1 FY 09 advances to corporate increased by 55.55% and advances to agricultural sector, SME and retail moved up by 28.73%, 30.14% and 12.92% respectively. The bank provided Rs.129 crore for the Market-to-Market (MTM) losses. At the end of this quarter nearly 85% of the total trading portfolio is at Held-to-maturity category, hence only 15% of the portfolio is exposed to the market risks. Reserve Bank has been adopting monetary policy to contain inflation and restrict M3 growth. Measures like repo rate hikes, additional CRR are impacting the bank’s profitability adversely. The return on assets, percentage of non performing assets has remained flat at 1.22% and 1.64% respectively. There was a marginal decline in capital adequacy ratio which has moved down to 12.24% from 12.95% a year ago. 
The stock is trading in the level of Rs.255-280. The stock is in a medium term down downward trend since hitting Rs.358 in the first week of May. In the last two months the stock lost nearly 25%.The stock has strong support level at Rs.350 and resistance level at Rs.200. Short term and medium term investors may pick this stock at this level.
| Rs Millions | Jun ' 08 | Mar ' 08 | Dec ' 07 | Jun ' 07 |
| Interest Income | 35483.2 | 35016.1 | 31511.1 | 27272.6 |
| Interest Expended | 23675.5 | 22847.9 | 20716.5 | 17800.5 |
| Operating profit | 10724.3 | 12122.2 | 9713.6 | 6778.1 |
| Provisions made | 349.01 | 286.59 | 231.37 | 299.3 |
| Net profit / loss | 5619.5 | 7570.4 | 5118.9 | 3152 |
| Equity capital | 5259.1 | 5259.1 | 4881.4 | 4881.4 |
| EPS (Rs) | 10.69 | 14.39 | 10.49 | 6.46 |
| OPM (%) | 71.15% | 73.03% | 71.64% | 68.84% |
| GPM (%) | 30.22% | 34.62% | 30.83% | 24.85% |
| NPM (%) | 15.84% | 21.62% | 16.24% | 11.56% |
STOCK OUTLOOK
The stock is trading in the level of Rs.255-280. The stock is in a medium term down downward trend since hitting Rs.358 in the first week of May. In the last two months the stock lost nearly 25%.The stock has strong support level at Rs.350 and resistance level at Rs.200. Short term and medium term investors may pick this stock at this level.
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