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Bank of India hits 17-month high on positive outlook; zooms 80% in 6 weeks

Rating agency Acuite Ratings & Research reaffirmed its rating of AA, revising the outlook to positive from stable for the bank's additional tier-1 bonds

Buzzing stocks | Bank of India | Markets

SI Reporter  |  Mumbai 

Among the first to exit PCA in February 2019, BOI has significantly reduced its gross non-performing assets (NPA) from 16.3 per cent in Q3 FY20 to 13.3 per cent in December quarter

Shares of rallied 5 per cent to hit a 17-month high of Rs 83.25 on the BSE in Thursday’s intra-day trade on a positive outlook. The stock of the state-owned lender was quoting at its highest level since June 2021.

In the past six weeks, it has zoomed 80 per cent from a level of Rs 46.30 touched on October 13, 2021.

on Wednesday, November 23, said that rating agency Acuite Ratings & Research reaffirmed its rating of AA, revising the outlook to positive from stable for the bank’s additional tier-1 bonds.

Acuite said that the rating continues to take into account improvement in profitability metrics, capital position and credit growth. The bank’s net interest margin (NIM) improved from 2.42 per cent as on H1FY22 to 3.04 per cent as on H1FY23.

For H1FY23, the profit after tax (PAT) stood at Rs 1,521 crore supported by healthy operational performance and lower provisions.

The rating further factored in the bank's strong parentage and demonstrated capital support from the government. This is well reflected in the bank’s healthy capitalization levels of 15.51 per cent as on September 30, 2022 (Tier I CAR: 13.38 per cent). The rating also took into account an improvement in the bank’s financial performance primarily led by decline by slippages and overall credit costs, the rating agency said.

The rating also considered the bank's healthy liability profile characterized by CASA mix of 44.12 per cent as on September 30, 2022. Additionally, the bank’s high provision cover of 88.96 per cent as on September 30, 2022 provides adequate buffer against near to medium term asset quality risk, it added.

These strengths are offset by the bank’s modest albeit improving asset quality. The bank’s GNPA and NNPA stood at 8.51 per cent and 1.92 per cent respectively as on September 30, 2022. While the bank continues to have healthy provision cover, performance of restructured portfolio and assets in softer buckets continues to be critical, the report said.

Going forward, the bank’s ability to maintain upward trajectory in the overall financial performance as well as contain asset quality risks will be key monitorables, the agency said.

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First Published: Thu, November 24 2022. 12:06 IST