Bank of India

The PSU bank, as was widely expected disappointed the markets and the stock tanked post the numbers.  Asset quality remained a big concern in Q2FY13, with sequential NPAs going up sharply. Gross NPAs rose from 2.56% to 3.42% and Net NPA rose from 1.69% to 2.04%. Provisioning rose (YoY) by 34% at Rs.1552 crore and in Q1Fy13, it was at Rs.472 crore. Clearly bad loans went up sharply which in turn has led to an overall poor performance. At end of current Q2, Provision coverage ratio was at 60.96%, maintained at same levels as in Q1FY13. The market had expected provisioning to be lower this quarter but looks like things got really bad on the asset front in this quarter itself.

NII was at Rs.2196, up 15% YoY and 7% QoQ. Net interest margin during the quarter stood at 2.42% v/s 2.43% in Q1Fy13. Capital adequacy ratio of the bank fell to 11.10% v/s 11.9 7% (YoY). The bank's total deposits at end of Q2Fy13 was at Rs.332,695 crore, up by 11% YoY and advances rise 20% at Rs.260,379 crore. This, as such is not a ‘hot’ favourite on the bourses when it comes to PSU stocks and hence the price is expected to remain under pressure for some time.