Maintain 'Reduce' on Bank of India - TP Rs.295 - Geojit BNP Paribas Financial Services

- Bank has reported better numbers for 4QFY12.

- Net profit at Rs.950 crore grew 93% yoy on better NII growth of 21% qoq to Rs.2500.

- NIM also improved as yield on domestic advances jumped 33 bps qoq to 12.26%. This was due to re-pricing of existing loans at a higher rate and disbursement of fresh loans at better rates.

- Domestic deposits declined 1.9% yoy and advances grew only 6.5% yoy.

- Reduced high cost term deposits by 7% and CASA improved 360 bps to 32.8%. These helped the bank to stabilize domestic deposit cost.

- Asset quality improved on higher recoveries in small ticket accounts, which were classified as NPA in 1Q &2QFY12.

- The improvement may sustain in the immediate term and the stock may continue to trade at the current levels.

- However, it seems that the improvements have been achieved at the cost of growth and Bank of India stocks may trade at a discount to its peers in the medium/ long term.

- Hence, 'reduce' rating on the stock is maintained.

Source : Equity Bulls

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