Bank of India rallies over 5% after sharp jump in net interest income, improved NPAs in Q2

Bank of India Ltd (NSE: BANKINDIA) stock rallied by more than 5 per cent in today's session after the state-owned bank reported sharp jump in its net interest income and improved non-performing assets NPAs in the July-September quarter even though its net income fell nearly 10 per cent on higher provisioning

At 1:45 PM, the counter quoted Rs 67.60 apiece on the NSE and BSE, gaining more than 5 per cent. 

Earlier on Thursday, Bank of India released it Q2 results wherein it reported a nearly 10 per cent decline in net income to Rs 960 crore on higher provisioning, which more than doubled to Rs 1,912 crore. The bank had made a provision of only Rs 894 crore in the year-ago period, which negated other improvements in the key numbers, such as net interest income rising from Rs 9,523 crore to Rs 11,497 crore and lower taxations at Rs 502 crore in the reporting quarter against Rs 733 crore.

The bank has registered a sharp uptick in net interest income to Rs 5,083 crore in the reporting quarter from Rs 3,523 crore in the year-ago period.

The net interest income (NII) jumped sharply as the bank booked higher margins from loans as it had passed on the repo rate hike to borrowers. Accordingly, it booked a net interest margin (NIM) of 3.04 per cent, up 64 bps from 2.42 per cent in the year-ago period and from Rs 2.55 per cent in the June quarter.

On the asset quality front, the bank said its net NPAs improved to 1.92 per cent from 2.79 per cent year-on-year or at Rs 8,836 crore from Rs 10,576 crore. Its gross NPAs declined sharply to 8.51 per cent or Rs 42,014 crore from 12 per cent or Rs 50,270 crore. This had its slippage ratio slipping to 0.30 from 0.36 and the credit cost ratio jumping nearly threefold to 0.60 from 0.26. Advances rose to Rs 8,130 crore from Rs 6,510 crore, while deposits remained stagnant at Rs 5,702 crore.

Following Bank Of India's second quarter business update, Morgan Stanley has revised its price target.

Bank of India has yielded a stellar return of nearly 30 per cent in 2022 so far. The stock's 52-week range is Rs 67 - Rs 40. Bank of India's market cap is around Rs 27452.9 crore, as per the NSE website.

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