Bank Of India reports 32.6% Net Income decline

28-05-2015 • About Bank Of India ($BANKINDIA) • By InTwits

Bank Of India reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Bank Of India doesn't have a profitable business model yet: FY2015 ROIC is 1.3%
Bank Of India has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's a lot of higher than industry average of 1.5%.
CAPEX is quite volatile: 17,250 in FY2015, 6,347 in FY2014, 3,884 in FY2013, 6,397 in FY2012, 4,041 in FY2011
The company has potentially unprofitable business model: ROIC is at 1.3%
It operates with high leverage: Net Debt/EBITDA is 3.8x while industry average is

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Bank Of India ($BANKINDIA) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	245,002	319,294	358,802	423,716	480,133	13.3%
Net Income	25,424	27,249	28,199	29,868	20,129	-32.6%
Balance Sheet
Cash	218,601	151,397	221,251	192,879	274,984	42.6%
Short Term Debt	19,732	21,614	23,534	541,078	631,411	16.7%
Long Term Debt	396,032	686,681	743,365	484,275	400,987	-17.2%
Cash flow
Capex	4,041	6,397	3,884	6,347	17,250	171.8%
Ratios
Revenue growth	-66.6%	30.3%	12.4%	18.1%	13.3%
Net Income Margin	10.4%	8.5%	7.9%	7.0%	4.2%	-2.9%
CAPEX, % of revenue	1.6%	2.0%	1.1%	1.5%	3.6%	2.1%
ROIC	6.1%	4.6%	3.0%	2.9%	1.3%	-1.6%
ROE	15.8%	14.0%	12.3%	10.8%	6.4%	-4.5%

Revenue and profitability

Bank Of India's Revenue surged on 13.3% in FY2015.

Net Income marign decreased on 2.9 pp from 7.0% to 4.2% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 3.6%. The company's CAPEX/Revenue increased slightly on 1.6 pp from 2.0% in FY2012 to 3.6% in FY2015. For the last three years the average CAPEX/Revenue was 2.1%.

Return on investment

The company operates at low ROIC (1.31%) and ROE (6.36%). ROIC decreased slightly on 1.6 pp from 2.9% to 1.3% in FY2015. ROE decreased on 4.5 pp from 10.8% to 6.4% in FY2015.

Leverage (Debt)

Debt increased slightly on 0.69% in FY2015 while cash jumped on 42.6% in FY2015.

Appendix 1: Peers in Banks

Below we provide Bank Of India benchmarking against other companies in Banks industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Kotak Mahindra Bank ($KOTAKBANK)		18.4%	22.9%	7.1%	26.1%
Dcb Bank ($DCBBANK)		26.7%	26.2%	22.5%	25.3%
Syndicate Bank ($SYNDIBANK)		32.2%	11.9%	7.9%	20.2%
Yes Bank ($YESBANK)		53.0%	33.7%	21.6%	17.7%
Axis Bank ($AXISBANK)		39.0%	24.5%	13.1%	15.6%
Median (26 companies)	-23.2%	28.5%	16.2%	10.3%	10.2%
Bank Of India ($BANKINDIA)		30.3%	12.4%	18.1%	13.3%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
State Bank Of Mysore ($MYSOREBANK)	1.3%	1.6%	1.3%		3.5%
Jammu & Kashmir Bank ($J&KBANK)	5.6%	1.4%	1.3%	2.2%	3.3%
Lakshmi Vilas Bank ($LAKSHVILAS)	4.4%	2.1%	1.4%	1.6%	2.4%
Dcb Bank ($DCBBANK)	1.6%	9.0%	7.0%	1.6%	1.9%
Karur Vysya Bank ($KARURVYSYA)	4.2%	2.0%	2.9%	2.5%	1.7%
Median (26 companies)	1.2%	1.2%	1.2%	1.2%	1.3%
Bank Of India ($BANKINDIA)	1.6%	2.0%	1.1%	1.5%	3.6%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Karnataka Bank ($KTKBANK)	5.5%	6.8%	10.2%	7.7%	10.4%
Axis Bank ($AXISBANK)	10.2%	9.6%	8.9%	9.1%	8.8%
Yes Bank ($YESBANK)	11.8%	9.8%	8.4%	8.4%	8.7%
Kotak Mahindra Bank ($KOTAKBANK)	7.8%	6.8%	6.5%	7.1%	8.5%
Lakshmi Vilas Bank ($LAKSHVILAS)		6.5%	7.5%	0.7%	6.1%
Median (26 companies)	7.5%	7.6%	6.3%	3.4%	4.7%
Bank Of India ($BANKINDIA)	6.1%	4.6%	3.0%	2.9%	1.3%

Bank Of India stock price chart

Bank Of India financials

mln.	FY2010	FY2011	FY2012

Revenue	733,641	245,002	319,294
EBITDA	0.000	0.000	0.000
Net income	17,872	25,424	27,249
CAPEX	2,242	4,041	6,397
Debt	358,252	415,764	708,295
Cash	156,580	218,601	151,397

About Bank Of India

Bank of India provides various banking products and services in India and internationally. It operates through Treasury Operations, Wholesale Banking, and Retail Banking segments. The company accepts various deposit products, such as saving, current, term, and tax saving deposits; and offers home loans, property loans, education loans, vehicle loans, personal loans, pensioner loans, holiday loans, loans for vocational studies, housing loans to NRIs/ PIOs, trade finance, as well as provides deposit schemes for NRIs. It also offers cash management services, project finance and syndication services, and bullion banking services; credit, debit, and prepaid cards; and other services. In addition, the company is involved in dealing in government and other securities, money market operations, and forex operations. As of March 31, 2014, it operated 4,646 branches; and 56 overseas centres across 5 continents. The company was founded in 1906 and is headquartered in Mumbai, India.