*Bank of India’s profits fell 28.6% yoy, led by weak net interest income growth (5.8% yoy) and high provisions. Due to lower NIM assumptions, we lower EPS 2.6%/4.4% in FY12/13. We maintain a Sell, as the bank’s modest core earnings and high NPA provisions are likely to keep its RoE below its past peak.*
*NIM declines, CASA share dips. *Credit growth* *(21.6% yoy) was slower than deposit growth (25.4% yoy). Domestic CASA share dipped 214bps yoy to 30.2%, one of the lowest of large PSU banks. NIM (adjusted for interest-tax refund) sharply declined 70bps yoy (75bps qoq) to 2.2%. A low domestic credit-to-deposits at 65.6% is likely to rise over FY12-13 and, hence improve NIM, though lower than previously estimated. We lower our FY12e/13e NII 4.7%/7%, and estimate NIM of 2.5%/2.6% in FY12/13. *High slippages and restructuring. *There seems to be no respite on asset quality, with incremental restructuring of ~Rs9.3bn. Slippages rose 68.5% qoq to Rs16.8bn (3.4% of loans), of which ~Rs8bn is due to migration to system-based recognition of NPAs, and ~Rs4bn due to a large road-infra-project exposure. Management expects high slippages in 2QFY12 as well due to system-based NPA recognition. The bank’s inconsistent asset quality trend is likely to constrain any significant valuation upside. *Safe Harbor Statement:* *Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.* ** *Nothing in this article is, or should be construed as, investment advice.** * ** * * ** ** -- For Anything related with Stock market be Online at http://www.niftyviews.com/ Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234 FOR TRIAL STOCK/NIFTY/OPTION CALLS You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group. To post to this group, send an email to [email protected] To unsubscribe email [email protected] for more info visit http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB . This is Not a Spam Mail. Disclaimer :- "The opinions expressed by the members on this board are based on their individual experience and perceptions and to share information with other members with the best of intentions to help fellow members in investment decisions as equity investment is a risky venture."
