The Bank of India (BOI) was incorporated in the year 1906. In the initial phase the operations of Bank of India were concentrated in western India. BOI, through branch expansion had acquired an all India profile by the mid-forties. It was one of the 14 banks that nationalized in the year 1969. Currently it is one of the largest public sector banks in terms of deposit base. BOI has more than 2640 branches well distributed across four regions of India with a nineteen overseas offices (second only to State Bank of India). BOI Shareholding Ltd., is a joint venture between the Bank of India and the Bombay Stock Exchange (BSE) was established to manage the clearing house of BSE. Other strategic investments include those in Securities Trading Corporation of India, IL&FS Venture Corporation and Central Depository Services. The bank has exited the asset management business while the non-banking finance subsidiary; BoI Finance has been amalgamated with the bank itself.

Products & Services:

Bank is having significance presence in the Indian banking space and one of the best service providers in Indian banking and financial space. Bank has more than 2,640 branches in India spread over all states/union territories, including 93 specialized branches. The bank provides a range of financial products and services including credit schemes, deposit schemes, cash management services, credit/debit cards, deposit vaults and corporate bonds. Apart from commercial and personal banking, it also specializes in agricultural finance, lease finance, small scale industries, asset recovery and treasury operations. It provides loans in mortgage, educational, auto finance, holiday, personal and home. It offers Internet banking services to both the retail and corporate clients and has entered into mutual funds, housing finance, custodial and depository through its subsidiaries.

Recently, BOI raised Rs 4,000 million through a private placement of innovative perpetual debt instruments. The bank has sizable presence abroad with a network of more than 25 branches in the key banking and financial centers of London, New York, Paris, Tokyo, Hong Kong, Singapore, Kenya, Shenzen and Vietnam. It already has RBI approval for representative offices in Doha, Bejing, Johannesburg, and branches in Tanzania, Belgium, Canada, Dubai, and South Africa. It has a wholly-owned subsidiary in Dar-Es-Salaam, Tanzania. The bank is to acquire PT Bank Swadesi Tbk, a listed bank in Indonesia. Bank has acquired a majority stake of 76% in the Indonesian bank for USD 24 million. Bank has a licence to deal in foreign exchange. International operations account for more than 30% of its net profit.

Valuation:

At current market price, stock is trading at 7.48 P/E multiple of its FY2010 estimated earningss. We recommend investors to buy “Bank of India” with medium to long-term investment horizon.