Hold Bank of India - Geojit BNP Paribas Financial Services

- 3QFY13 PAT at Rs.800 crore up 12.2% yoy and above market expectations. Better than expected PAT was due to lower effective tax rate of 15% as the bank made higher than expected write off of Rs.800 crore.

- NII at Rs.2310 crore is in line with market expectations but reported NIM fell 6 bps qoq against the market expectation of an increase.

- Higher recoveries driven other income and a 100 bps increase in CASA are the other positives.

- GNPA declined 34 bps qoq due to higher write offs and recoveries as well as upgradations remained flat qoq.

- Slippages of Rs.1200 crore remain below past quarterly trends.

- Slippages contained one chunky steel sector exposure of Rs.500 - 600 crore, which slipped from restructured accounts. Adjusted for this, slippages were 1.2% and could surprise in 4QFY13.

- Restructured assets stand at 7.9% of loans with Rs.2200 crore added in 3QFY13.

- Actual asset quality performance versus management guidance has been very volatile resulting in investors shying away from the stock. According to the management, the asset quality trends are likely to improve going forward.

- Maintain 'hold' rating at the recent quotes. A correction from the current level would provide a buying opportunity.

Source : Equity Bulls

Keywords