Bank of India shares jumps 21% on surge in Q2 net profit

State-owned Bank of India (BoI) reported a forecast beating 106% year-on-year surge in its net profit, aided by higher interest income, lower non-interest income and lower bad loans. Net profit doubled to Rs 622 crore as on September 30, 2013 from Rs 302 crore a year back.

Bank of India shares spiked 21% to close the day’s trading at Rs 210 on the BSE.

“We expect to attain a loan growth of 18-20 per cent,” said V.R. Iyer, Chairperson and Managing Director, at Bank of India.

“We see opportunities for lending in mid size corproates and retail. We should maintain the current level of non-performing assets. So far, good rated PSU companies along with retail credit helped expand our loans. After a spike in short term interest rates, non-banking finance companies too added to our book.”

Net interest income or the difference between interest earned and paid out, rose 15% y-o-y to Rs 2,527 crore. Non-interest income increased 23% to Rs 1,100 crore.

The bank expanded its domestic loans by 27.55% to around Rs 2.33 lakh crore from Rs 1.83 lakh crore a year ago. Gross non-performing asset ratio improved to 2.93% from 3.42%. Net NPA fell to 1.85% from 2.04% a year back.

“The stock was under-valued with a book value of 0.40 times. The normal book value is generally at 1 times for banks. Improvement in asset quality added along with robust growth added to the sentiment,” said Dinesh Shukla, a banking analyst from Sharekhan brokerage.