BoI NPAs likely to deteriorate in Q2 as well: Angel Broking

Vaibhav Agrawal of Angel Broking advises investors to stay away from bank of India (BOI). He sees pain continuing for the public sector lender as its non-performing asset (NPA) might deteriorate in the second quarter as well.

BOI on Friday reported 8.6% rise in its net profit at Rs 964.18 crore for the first quarter ended June 30, 2013. Also read: Yields to normalise soon; pvt banks safe: Birla Sun Life MF Below is the verbatim transcript of his interview to CNBC-TV18 Q: Bank of India saw bit of a recovery and now the stock has fallen 2.5 percent. We have seen how volatile Bank of India’s numbers have been in the past many quarters, what is your initial reaction? A: Definitely the numbers on online items are better than what we expected including the gross and net NPA. Part of it would have been BOI getting helped by the technicality of the 90 day recognition where in the market is aware that there is a large textile account where they have the largest exposure. Another PSU bank has taken a hit on this account this quarter. Probably BOI avoided the hit in this quarter but then Q2 we would expect NPA numbers to deteriorate again for BOI. Q: How much is that textile account? A: It is close to Rs 1500-2000 crore on the textile account itself. Clearly looking at this quarter’s numbers they would not have taken the hit this time. Q: What is the attitude to the bank itself, you would still have an avoid? A: Yes in this environment again BOI would fall in the same court as rest of the PSU banks. So, even the valuations would be as such but we would continue to avoid it in this environment. Q: After the numbers came the stock has been falling, why so? A: Possibly the results one never really knows how the bets are placed before the results are announced.