Bank of India (NSE: BANKINDIA) Q2 Results: Should you Hold or Sell?

Bank of India (NSE: BANKINDIA) stock fell by 5.23% after the bank for the second quarter reported the net loss of Rs 11.56 billion for the three months ended Sept. 30, compared with a profit of 1.79 billion rupees a year earlier.

This is on back of higher provisioning of bad loans. The provisions for bad loans surged 51.5 percent to Rs 28.28 billion, while total provisions rose 71.2 percent to Rs 33.43 billion. Total income of the bank fell to Rs 10,800.24 crore during the second quarter ending September from Rs 11,600.47 crore in the corresponding period of 2017-18. 

Bank of India Stock Price Chart (NSE: BANKINDIA)

The stock is trading at the level of Rs.86.90, has immediate support at Rs74.20 level and resistance at Rs.107

BANKINDIA’ gross non-performing assets (NPAs) rose to 16.36 percent of gross advances by September-end 2018 against 12.62 percent as on September 30, 2017. However, gross NPAs were down compared to 16.66 percent by the end of previous (June) quarter of the current financial year, which means that the asset quality improved slightly from the previous quarter.

Net NPAs also rose to 7.64 percent at September-end from 6.47 percent in the year-ago period. At the end of June, the net NPA proportion was at 8.45 percent. In value terms, the bank’s gross NPAs of the bank is of Rs 61,560.65 crore by the end of September quarter, 2018-19, compared to Rs 49,306.90 crore in the year-ago period. Net NPA grew to Rs 25,994.15 crore as against Rs 23,565.73 crore.

Overall, the result of the BANKINDIA is subdued, but the asset quality improved the last quarter. Long term investors can HOLD the stock with the price target of Rs.115.

Reserve Bank of India’s (RBI’s) board meeting scheduled to be on 19 November is expected to be a stormy affair due to the ongoing tussle between the government and the central bank. The issues that are likely to be raised in the board meeting will include matters related with capital framework, management of surplus and liquidity measures for MSMEs.

The RBI board meetings are pre-decided, with the agenda circulated much in advance. However, board members can raise the off-agenda items like the issue of interim dividend along with the capital framework of RBI in the board meeting.