Thread by @Abhishe27960014

6 Key Takeaways of "Bank of India" Q3 Result in this🧵

1) Banks make money by charging more interest on loans they give out than the interest they pay to people who save their money in the banks.

Interest Income = Interest Earned - Interest Expended

#bankofindia #earnings

Hence, Interest income is an important number for a bank to look at.

Bank of India made 64% more money from interest income compared to last year which is a very big positive for the bank.

Interest Income stands at 5,596 crores.

2) Regardless of huge growth(64%) in interest income, Net Profit only grew up by 12% from last year to approx. 1,151 crores which is concerning.

Reasons:

▶️ Non- interest income declined by 22% YoY

▶️ More provisions for bad loans are accounted as compared to last year

3) Banks use a metric called NPA to track unpaid loans. A lower NPA indicates that the bank is more successful in recovering money from borrowers.

Bank of India's NPA ratio is currently at 7.66% which is high in comparison to private banks. This NPA is not considered good.

HDFC Bank's NPA in comparison stands at 1.23%.

However, the bank has made significant progress in improving its bad loans situation this year, as the percentage of bad loans has decreased from 10.46% last year.

4) When a bank lends more money to customers, the bank has better chance to make more money.

Bank of India loaned 16.08% more money to customers this time, which is good for the bank's business.

5) Lastly, the Bank of India has a CASA ratio of 44.5%, which is the same as the largest private bank's(HDFC Bank) CASA.

Bank pay less interest on money in current & savings accounts than it does on money in fixed deposit accounts. Hence, higher CASA is preferred.

6) As of now, the two major shareholders of Bank of India are the Government of India, which owns 81.41%, and LIC, which owns 7.05%.