State-owned Bank of India tanks over 12% as slippages, credit cost soar

Shares of State-owned Bank of India (BoI) tanked 12.3 per cent at Rs 121.70 per share on the BSE in Monday’s intraday deals. The steep drop in the stock prices came despite registering a decent increase in the bank’s net profits and interest income. 

On Friday, the public sector undertaking (PSU) bank announced a 7 per cent increase in net profit, reaching Rs 1,439 crore for the March quarter, compared to Rs 1,350 crore in the same quarter last year. Total income rose to Rs 17,913 crore from Rs 16,549 crore in the corresponding period. Net interest income (NII) grew to Rs 5,937 crore from Rs 5,523 crore a year ago.

However, according to reports, the bank's slippages increased to Rs 2,308 crore in Q4FY24 as against Rs 1313 crore in Q3FY24. Sippages denote the amount of fresh loans that have turned into bad loans. 

The annualised credit cost is also at a 12 quarter high of 1.45 per cent in March quarter of FY24 versus 0.45 per cent in preceding quarter of the same fiscal year. 

Morgan Stanley issued an underweight rating for Bank of India with a target price of Rs 124, highlighting negatives such as elevated slippages quarter-on-quarter (QoQ) along with higher credit costs.

In terms of asset quality, the bank's gross Non-Performing Assets (NPAs) reduced to 4.98 per cent of gross advances as of March 31, 2024, down from 7.31 per cent in March 2023. Net NPAs also decreased to 1.22 per cent of advances, from 1.66 per cent in 2023. 

However, provisions for bad loans increased to Rs 2,043 crore compared to Rs 546 crore in the same quarter last year. The provision coverage ratio stood at 90.59 per cent by the end of March.

For the financial year ending March 2024, the bank's net profit surged by 57 per cent to Rs 6,318 crore from Rs 4,023 crore the previous year. Total income for FY24 rose to Rs 66,804 crore compared to Rs 54,748 crore in FY23.

The board has proposed a dividend of Rs 2.80 per equity share of face value Rs 10 each fully paid up for the year 2023-24, subject to approval at the upcoming Annual General Meeting. Additionally, the Capital Adequacy Ratio (CRAR) improved to 16.96 per cent compared to 16.28 per cent as of March 31, 2023.

At 11:22 AM; the stock of the PSU bank was trading 11.13 per cent lower at Rs 123.40 per share. By comparison, the S&P BSE index fell 0.64 per cent at 72,197 levels.