Bank of India falls 6% as investors book profit amid margin squeeze

The lenders’ total income increased to Rs 16,521 crore during the third quarter against Rs 14,218 crore a year ago

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Bank of India was trading almost 7 percent down in the afternoon trade on February 5 despite robust Q3 numbers, as investors rushed to book profit after a 34 percent rally since October.

At 12.30 pm, the stock was trading at Rs 141.20 on the National Stock Exchange (NSE). Analysts said the steep fall in Bank of India was due to a combination of post-results profit booking and continued margin compression for the banking sector.

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On February 2, Bank of India reported a 62.4 percent year-on-year rise in net profit to Rs 1,895 crore in the third quarter , helped by improvement in NII.

The bank’s gross non-performing asset (NPA) stood at 5.35 percent, down from 7.66 percent in the year-ago period. On the other hand, net NPA stood at 1.41 percent, improving from 1.61 percent.

In a January 15 report, analysts at ICICI Direct had a “buy” call on the stock, with a revised target price of Rs 165.

According to the analyst, “Continued healthy business growth, steady margins and moderation in credit costs is seen as an aid to improve the ROA. Recovery from stressed and written off exposure could act as an earnings catalyst going forward.”

According to Bloomberg, out of the three analysts tracking the stock, two have a “buy” call and one “sell”. Morgan Stanley has a “sell” call on the stock with a target price of Rs 125.

Also read: Buzzing Stocks: IndiGo, PB Fintech, SBI, Tata Motors, Bharti Airtel, Paytm, Zee, others in news

Over the past year, the stock has gained over 79 percent against 11 percent gain in Bank Nifty.

Bank of India’s Managing Director Rajneesh Karnatak told CNBC-TV18, the annualised NIM for the bank is around 2.95 percent and that they are working to protect that.

Efforts are also being made to improve CASA. The management has attributed the thin margins to corporate loans.

For Q3 slippages were at Rs 1,300 crore, which according to the management is the lowest the bank has ever seen.

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