InvestorQ : How were the quarterly numbers of Bank of India in the September 2020 quarter?
Sam Eswaran made post

How were the quarterly numbers of Bank of India in the September 2020 quarter?

Moii Chavate answered.
8 months ago

Bank of India reported a very minor 3.44% rise in net income in the Sep-20 quarter at Rs.12,478 crore. The damage on account of COVID was not too pronounced on the PSU banks and that was evident in the performance of BOI. The bank also reported one of its best profit performances in this quarter.

For the Sep-20 quarter, BOI reported operating profits higher by 25% at Rs.3099 crore on the strength of better cost management and lower interest costs due to ample liquidity in the system. This resulted in the operating margins of BOI surging from 20.57% to 24.84%.

Let me now turn to the bottom line. For the Sep-20 quarter, BOI reported net profits of Rs.543 crore which is more than double the profits reported in the Jun-19 quarter. The consequence was that the net profit margin of BOI more than doubled from 2.13% to 4.36% on a yoy basis.

But the real worry for banks like BOI remains the gross NPAs, which still look very disconcerting at 13.79%. You can argue that it is down 259 bps on a yoy basis but that still too heavy in absolute terms. The only consolation is that at net NPA levels of 2.89% most losses are apparently provided for, hoping there is no escalation.

Finally, the ROA at 0.28% for BOI is not impressive at all and remains much below the private banking standards. But that is the smaller concern. The bigger concern is the capital adequacy ratio at 12.8% as it severely restricts the ability of the bank to expand the loan book without diluting capital. That surely looks like a Catch-22 situation.