CMP 165.00

Target Price 183.00

ISIN: INE84A01016

SEP 26th

, 2013

BANK OF INDIA Result Update: Q1 FY14

BUYBUYBUYBUY

Stock Data

Sector Banking

BSE Code 532149

Face Value / Div. Per Share 10.00

52wk. High / Low (Rs.) 392.20/126.95

Volume (2wk. Avg ) 401000

Market Cap ( Rs in mn ) 98445.60

Annual Estimated Results (A*: Actual / E*: Estimated)

Years FY13 FY14E FY15E

Net Income 319089.20 347807.23 375631.81

NII 127900.00 140927.66 150450.90

Net Profit 27493.10 30043.84 32927.46

EPS 46.08 50.36 55.19

P/E 3.58 3.28 2.99

Shareholding Pattern (%)

1 Year Comparative Graph

BSE SENSEX BANK OF INDIA

SYNOPSIS

Bank of India (BOI) founded on 7th Sept, 1906

by a group of businessmen from Mumbai and

was nationalized along with 13 other banks.

Bank’s Capital Adequacy Ratio registered at

10.36% as on 30.06.13 under Basel III.

CASA deposits grew by 16.16% to Rs. 966870

mn from Rs. 832330 mn as at end of June 2012.

Net profit for quarter increased by 8.65% on Y-

O-Y basis to Rs.9641.80 mn compared to

Rs.8874.50 mn for the corresponding quarter in

the previous fiscal.

The deposits of the Bank were up by 22.41% at

Rs.4149640 mn while gross advances increased

to Rs.3094320 mn reflecting a year-on-year

growth of 17.14%.

The Bank has touched the business mix of

Rs.7243960 million with 20.10% growth YoY.

Net-Interest Income grew by 24.15% year-on-

year and stood at Rs.25370 mn as against

Rs.20440 mn for the corresponding period.

The Bank has been awarded the ‘Outlook

Money Award 2012’ for “Best Education Loan

provider”.

As of June-13, Bank’s distribution network was

at 4322 Branches & 2452 ATMs, with increase

of 300 Branches and 725 ATMs over 4022

Branches and 1727 ATMs as of June 30, 2012.

Net Income & PAT of the company are expected

to grow at a CAGR of 10% and 7% over 2012 to

2015E respectively.

PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

Bank of India 165.00 98445.60 46.08 3.58 0.41 100.00

Indian Overseas Bank 45.90 42462.20 4.97 9.25 0.32 20.00

Punjab National Bank 482.00 170091.40 135.15 3.56 0.52 270.00

SBI 1678.20 1146954.00 198.74 8.44 1.16 300.00

Quarterly Highlights (STANDALONE)

Results updates- Q1 FY14,

The company’s net profit rises to Rs. 9641.80 million as against Rs. 8874.50 million in the corresponding quarter

ending of previous year, an increase 8.65%. Revenue for the quarter rose 10.79% to Rs. 85412.40 million from

Rs. 77091.70 million, when compared with the prior year period. Reported earnings per share of the company

stood at Rs. 16.16 a share during the quarter, registering 4.62% an increase over previous year period.

Months JUNE-13 JUNE-12 % Change

Net Income 85412.40 77091.70 10.79%

PAT 9641.80 8874.50 8.65%

EPS 16.16 15.45 4.62%

Segment Revenue

Particulars (Rs.mn.) Q1 FY14

Corporate/Wholesale Banking 41957.20

Treasury Operations 30493.20

Retailing Banking 24904.10

Other Banking Operations 11.30

Total 97365.80

Latest Updates

• The Bank has posted a net profit of Rs. 9641.80 million for the quarter ended June 30, 2013 as compared to

Rs. 8874.50 million for the quarter ended June 30, 2012. Total Income has increased from Rs. 85500.30

million for the quarter ended June 30, 2012 to Rs. 97220.10 million for the quarter ended June 30, 2013.

• The Bank’s operating profit for the first quarter rose by 30.23% and stood at Rs.21800 mn from Rs.16740

mn in the corresponding period in 2012.

• Net-Interest Income grew by 24.15% year-on-year and stood at Rs.25370 mn as against Rs.20440 mn for the

corresponding period.

• The Bank has touched the business mix of Rs.7243960 million with 20.10% growth YoY.

• The deposits of the Bank were up by 22.41% at Rs.4149640 mn while gross advances increased to

Rs.3094320 mn reflecting a year-on-year growth of 17.14%. CASA Deposits increased from Rs. 832330 mn

in Q1 FY13 to Rs. 966870 mn in Q1 FY14.

• Retail Loans grew by 16.50% on YoY basis – Growth in Home Loans 24.46% on YoY basis.

• Bank’s Capital Adequacy Ratio registered at 10.36% as on 30.06.13 under Basel III.

• The Provision Coverage Ratio as at 30th June, 2013 is 60.97%

• As of June-13, Bank’s distribution network was at 4322 Branches and 2452 ATMs, with increase of 300

Branches and 725 ATMs over 4022 Branches and 1727 ATMs as of June 30, 2012.

• The Bank has been awarded as “The Best Bank for excellence in AADHAR related UIDAI programme of

Government of India” at the hands of Prime Minister at DODU village near Jaipur in Rajasthan.

• The Bank has been rated by Economic Times as the Second Most Trusted Brand in India” among the PSU

banks.

• The Bank has received “Best Banker” award at the India SME excellence Awards-2013, for exemplary

contribution in Banking Sector.

• Cash withdrawal limit through ATMs has been increased from Rs. 15000.00 = to Rs.25000.00 = w.e.f.

01/06/2013.

• Bank plans to open subsidiaries in Botswana, Canada and Brazil and also plans to open Representative office

in Myanmar.

Company Profile

Bank of India was founded on 7th September, 1906 by a group of eminent businessmen from Mumbai. The Bank

was under private ownership and control till July 1969 when it was nationalised along with 13 other banks.

Beginning with one office in Mumbai, the Bank has made a rapid growth over the years and blossomed into a

mighty institution with a strong national presence and sizable international operations. In business volume, the

Bank occupies a premier position among the nationalised banks. The Bank has touched the business mix of

Rs.7243960 million with 20.10% growth YoY as on 30 June 2013.

The Bank has 4322 branches and 2452 ATMs in India spread over all states/union territories including

specialized branches as on 30th June 2013. The Bank has presence across 5 continents and 20 countries covering

all the major financial centres such as London, New York, Paris, Tokyo, Singapore and Hong Kong. As on

31.03.2013, bank has a network of 53 foreign offices which includes 4 Representative Offices, 4 Subsidiaries and

1 Joint Venture.

Corporate

� Cash Management Services

� Project Finance & Syndication Services

� Loans

� Bullion Banking

� Export Finance

� Channel Credit

� Foreign Currency Swing Limit

� Exporters Gold Card

� Dual Currency Swing Limit

� Traders

Rural

� Cards

� Kisan Credit Card

� BOI Shatabdi Krishi Vikas Card

� Kisan Samadhan Card

� Star Bhumiheen Kisan Card

Services

� Agri Clinics

� Cold Storage

� Composit Cash Credit

� Crop Finance

� Farm Mechanisation

� Financing for Draught

Animals & Carts

� Land Development

� Minor Irrigation

� Poultry Development

� Purchase of Land

� Rural Godowns

� Dairy Development

MSME

� Star Laghu Udyami Samekat Loan

� Star SME Liquid Plus

� Star SME Auto Express

� Star SME Contractor line of Credit

� Star SME Education Plus

� Star SME term loan

� Web based dealers application

Retail

� Savings

� Current

� Term

� Double Benefit Deposit

� Fixed Deposit

� Short Deposit

� Quarterly Deposit

� Monthly Deposit

� Recurring Deposit

� Tax Saving

� Loans

� BOI Star Home Loan

� BOI Star Diamond Home Loan

� BOI Star Loan Against Property

� BOI Star Education Loan

� BOI Star Vidya Loan

� BOI Star Vehicle Loan

� BOI Star Personal Loan

� BOI Star Pensioner Loan

� BOI Star Holiday Loan

� BOI Star Mahila Gold Loan

� BOI Star Mitra Personal Loan

� BOI Star IPO

� BOI Star Loan scheme for Vocational

Studies

� NRI

� Loans

� Housing Loans to NRIs/PIOs

� NRI Deposit Scheme

� Cards

� Debit Card

� Bingo card

� DhanAadhaar Card

� Master Debit Card

� Master Platinum Debit Card

� Pension Aadhaar Card

� Rupay Debit Card

� RuPay Kisan Card

� SME Card

� Star Vidya Card

� VISA Debit Card

� VISA Platinum Privilege Debit Card

� Gift Card

� Credit Card

� Credit Card for Pensioners

� India Card

� Krishi Vikas Card

� Navy Classic

� Navy Gold

� TAJ Premium Card

� Visa Gold Card

� Visa Gold Card International Card

� Visa Platinum Privilege Card

Financial Highlight (STANDALONE) (A*- Actual, E* -Estimations & Rs. In Millions)

Balance Sheet

FY12 FY13 FY14E FY15E

CAPITAL AND LIABILITIES

Capital 5745.20 5966.41 5966.41 5966.41

Reserves and Surplus 203872.65 233215.15 263258.99 296186.46

Deposits 3182160.33 3818395.86 4429339.20 5005153.29

Borrowings 321142.25 353675.85 385506.68 418274.74

Other Liabilities and Provisions 132434.28 114773.91 117069.39 119996.12

Total 3845354.71 4526027.18 5201140.66 5845577.02

ASSETS

Cash and Balances with Reserve Bank of India 149867.1 219670.36 285571.47 359820.05

Balances with Banks and Money at Call and Short notice 197245.45 328688.23 460600.65 621810.88

Investments 867535.86 946134.32 1021825.07 1093352.82

Advances 2488333.44 2893674.97 3298789.47 3639544.06

Fixed Assets 27715.92 28701.25 29562.29 30449.16

Other Assets 114656.94 109158.05 104791.73 100600.06

Total 3845354.71 4526027.18 5201140.66 5845577.02

Annual Profit & Loss Statement for the period from 2012 to 2015E

Value(Rs.in.mn) FY12 FY13 FY14E FY15E

Description 12m 12m 12m 12m

Net Income 284806.70 319089.20 347807.23 375631.81

Other Income 33211.70 37660.00 41802.60 46400.89

Total income 318018.40 356749.20 389609.83 422032.69

Interest Expended -201672.30 -228849.20 -248682.17 -271581.80

Net Interest Income 116346.10 127900.00 140927.66 150450.90

Operating Expenses -49406.40 -53315.40 -56344.77 -60852.35

Operating Profit 66939.70 74584.60 84582.89 89598.54

Provisions and Contingencies -31164.30 -44507.60 -43983.10 -45695.26

Profit Before Tax 35775.40 30077.00 40599.79 43903.29

Tax -9000.00 -2583.90 -10555.94 -10975.82

Profit After Tax 26775.40 27493.10 30043.84 32927.46

Equity Capital 5745.20 5966.40 5966.40 5966.40

Reserves 203872.65 233215.15 263258.99 296186.46

Face Value (Rs.) 10.00 10.00 10.00 10.00

EPS 46.60 46.08 50.36 55.19

Quarterly Profit & Loss Statement for the period from 31 DEC 2012 to 30 SEP 2013E

Value(Rs.in.mn) 31-Dec-12 31-Mar-13 30-Jun-13 30-Sep-13

Description 3m 3m 3m 3m

Net Income 80226.90 81716.10 85412.40 88828.90

Other Income 9371.40 10939.40 11807.70 12752.32

Total income 89598.30 92655.50 97220.10 101581.21

Interest Expended -57142.10 -56956.00 -60042.20 -62890.86

Net Interest Income 32456.20 35699.50 37177.90 38690.35

Operating Expenses -13898.30 -14948.70 -15374.00 -16255.69

Operating Profit 18557.90 20750.80 21803.90 22434.67

Provisions and Contingencies -9157.80 -15106.30 -6945.60 -9332.82

Profit Before Tax 9400.10 5644.50 14858.30 13101.84

Tax -1365.30 1921.00 -5216.50 -4389.12

Profit After Tax 8034.80 7565.50 9641.80 8712.73

Equity Capital 5745.20 5966.40 5966.40 5745.20

Face Value (Rs.) 10.00 10.00 10.00 10.00

EPS 13.99 12.68 16.16 15.17

Ratio Analysis

Particulars FY12 FY13 FY14E FY15E

EPS (Rs.) 46.60 46.08 50.36 55.19

Operating Profit Margin (%) 23.50% 23.37% 24.32% 23.85%

PAT Margin (%) 9.40% 8.62% 8.64% 8.77%

P/E Ratio (x) 3.54 3.58 3.28 2.99

ROE (%) 12.77% 11.49% 11.16% 10.90%

ROCE (%) 1.80% 1.69% 1.66% 1.56%

Debt-Equity Ratio 16.71 17.44 17.88 17.95

Book Value (Rs.) 364.86 400.88 451.24 506.42

P/BV (x) 0.45 0.41 0.37 0.33

Charts

Outlook and Conclusion

� At the current market price of Rs.165.00, the stock P/E ratio is at 3.28 x FY14E and 2.99 x FY15E respectively.

� Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs. 50.36 and

Rs.55.19 respectively.

� Net Income and PAT of the company are expected to grow at a CAGR of 10% and 7% over 2012 to 2015E

respectively.

� On the basis of Debt Equity ratio, the stock trades at 17.88 x for FY14E and 17.95 x for FY15E.

� Price to Book Value of the stock is expected to be at 0.37 x and 0.33 x for FY14E and FY15E respectively.

� We recommend ‘BUY’ in this particular scrip with a target price of Rs. 183.00 for Medium to Long term

investment.

Industry Overview

India’s Rs. 77 trillion (US$ 1.30 trillion)-banking industry is well at par with global standards and norms. Prudent

practises and conventional framework adopted by the regulator, Reserve Bank of India (RBI), have insulated

Indian banks from the global financial crisis.

The country has 87 scheduled commercial banks with deposits worth Rs.71.6 trillion (US$ 1.21 trillion) as on 31

May, 2013. Of this, 26 are public sector banks, which control over 70 per cent of India’s banking sector, 20 are

private banks and 41 are foreign banks. Of the total, 41 banks are listed with a total market capitalisation of

Rs.9.35 trillion (US$ 158.16 billion) as per the recent statistics.

Key Statistics

• According to the RBI’s ‘Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks’,

September 2012, Nationalised Banks accounted for 52.0 per cent of the aggregate deposits, while the State

Bank of India (SBI) and its Associates accounted for 22.3 per cent. The share of New Private Sector Banks, Old

Private Sector Banks, Foreign Banks, and Regional Rural Banks in aggregate deposits was 13.6 per cent, 4.8

per cent, 4.3 per cent and 2.9 per cent, respectively.

Nationalised Banks accounted for the highest share of 50.9 per cent in gross bank credit followed by State

Bank of India and its Associates (22.1 per cent) and New Private Sector Banks (14.7 per cent). Foreign Banks,

Old Private Sector Banks and Regional Rural Banks had shares of around 4.9 per cent, 4.9 per cent and 2.6

per cent, respectively.

• India's foreign exchange (forex) reserves stood at US$ 280.19 billion for the week ended July 12, 2013,

according to data released by the central bank. The value of foreign currency assets (FCA) - the biggest

component of the forex reserves – stood at US$ 252.14 billion, according to the weekly statistical supplement

released by the RBI.

• The number of mobile banking transactions doubled to 5.6 million in January 2013 from 2.8 million in

January 2012. The value of these transactions increased three-times to Rs 625 crore (US$ 105.73 million)

during the month from Rs 191 crore (US$ 32.31 million) in the corresponding month last year.

• Moreover, non-resident Indians (NRIs) parked deposits aggregating US$ 14.18 billion in the financial year

ended March 2013, depicting an increase of 19 per cent over the previous year.

Recent Developments

• India's leading infrastructure development and finance company Infrastructure Leasing & Financial Services

Limited (IL&FS), has inked a Memorandum of Understanding (MoU) with Industrial and Commercial Bank of

China (Asia) Limited (ICBC (Asia)), for mutual cooperation in infrastructure project development services

and financial services related thereto.

The agreement envisages a scope of cooperation between the two financial entities for providing

infrastructure project development services, including financial services relating thereto, trade, corporate

banking, investment banking and treasury related services, debt raising, advisory and other form of

permissible economic cooperation for such projects across Northern and Eastern Asia and is expected to

facilitate more business opportunities for both the institutions in these geographies.

• Meanwhile, Standard Chartered Bank has announced that it will buy US-based Morgan Stanley’s domestic

private wealth management business. The deal, to be completed by the end of 2013, would boost Standard

Chartered’s private wealth assets under management by 25 per cent or about US$ 750 million.

• Marking another milestone in achieving financial inclusion, Vodafone India and ICICI Bank have partnered to

launch a mobile money transfer and payment service, M-Pesa. The service will allow customers to transfer

money to any mobile phone in India, remit funds to bank accounts, deposit and withdraw cash from

designated outlets, pay utility bills, and shop at select merchant establishments.

The new service will initially be offered in West Bengal, Bihar and Jharkhand through 8,300 authorised

agents. It will be made available across India by 2014-15.

• Public sector lender SBI intends to make a strong position in refinance market in 2013. The bank offers

lowest lending rates for buying homes. The fast growing market of ‘home loans transferred from other banks’

consists 25 per cent of the total home loans disbursed by the bank in FY13. SBI made Rs 30,000 crore (US$

5.08 billion) of home loans in 2012-13.

• Meanwhile, US-based Customers Bancorp Inc (CUBI) has plans to infuse US$ 51 million in multiple securities

of Religare Enterprises Ltd. Religare is currently aspiring for a banking licence to enter the banking industry.

The investments will take place through a combination of primary and secondary market transactions.

Government Initiatives

India’s central bank is about to propose fundamental changes in the structure of Indian banking industry. The

suggestions include consolidation of some large banks to create two-three global ones, setting up of smaller

banks, separate licenses for specific banking operations instead of a single universal one, continuous licensing for

new banks and conversion of some urban cooperative banks into full-fledged commercial banks.

Also, the RBI has, for the time being, relaxed the norm that stipulates non-banking finance companies (NBFCs) to

have a minimum gap of six months between two non-convertible debentures (NCDs) issues. The move is aimed

at streamlining the process of moving into a more robust asset-liability management framework in a non-

disruptive manner.

Road Ahead

Over the past few years, Indian banking system has majorly went revamp and modernisation. The new

infrastructure adopted by the banking system is mainly comprised of information technology (IT) products and

services.

Indian banking and securities companies will spend around US$ 422 billion on IT products and services in 2013.

That will imply a 13 per cent rise from Rs 37,300 crore (US$ 6.31 billion) spent in 2012. IT services is the largest

overall spending category at Rs 13,200 crore (US$ 2.23 billion) in 2013. This ensures that IT service providers lay

a strong focus on the financial services sector, according to a study by research and analyst firm Gartner.

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale

of any financial instrument or as an official confirmation of any transaction. The information contained herein is

from publicly available data or other sources believed to be reliable but do not represent that it is accurate or

complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall

not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

information contained in this report. This document is provide for assistance only and is not intended to be and must

not alone be taken as the basis for an investment decision.

Firstcall India Equity Research: Email – info@firstcallindia.com

C.V.S.L.Kameswari Pharma

U. Janaki Rao Capital Goods

Ashish.Kushwaha IT, Consumer Durable & Banking

Suhani Adilabadkar Diversified

M.Vinayak Rao Diversified

B. Anil Kumar Diversified

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