India Ratings and Research (Ind-Ra) has downgraded Bank of India's (BoI) Long-Term Issuer Rating to 'IND AA' from 'AA+'. The Outlook is Stable.
The downgrade reflects the BoI's inability to sustain its current position of systemic importance with the possibility of a further decline in its overall share of systemic assets and liabilities, mirroring the continuing pressure on its asset quality. In addition, the restructuring that is expected to be carried out post August 2020 and consistently decreasing common equity Tier 1 (CET1) levels (below FY19 levels) would continue to keep operational metrics under pressure in the medium term and thereby impact the bank's ability to maintain its systemic importance. BOI's Long-Term Issuer Rating reflects the bank's systemically important position and Ind-Ra's expectations that the bank would continue to receive support from the government of India (GoI).
During FY20, BoI reported a higher pre-provisioning operating buffer and an improved provision coverage ratio (excluding technical write-offs) than FY19; although continued to report losses, driven by an elevated slippage ratio and a higher credit cost. Consequently, BoI's capital ratios declined year-on-year in FY20 and 1QFY21, close to the minimum regulatory requirement. Ind-Ra expects the bank to continue to witness higher credit costs in FY21-FY22 on account of the ageing provisions in addition to the increasing credit costs due to the COVID-19 pandemic, which could impact its ability to maintain its position of relative systemic importance.
Shares of BANK OF INDIA was last trading in BSE at Rs.39.5 as compared to the previous close of Rs. 40.3. The total number of shares traded during the day was 493868 in over 1249 trades.
The stock hit an intraday high of Rs. 40.95 and intraday low of 39.35. The net turnover during the day was Rs. 19784684.