Bank of India Limited: history, ownership, mission, how it works & makes money

A Brief History of Bank of India Limited

Bank of India Limited (BOI) was established on September 7, 1906, in Mumbai, India. It initially functioned as a private bank and was registered under the Companies Act of 1956. In 1969, the bank was nationalized along with 13 other major commercial banks in India. By the end of March 2023, BOI had a total network of over 5,000 branches and around 10,000 ATMs.

As part of its growth trajectory, BOI expanded internationally, establishing its first overseas branch in London in 1946. Currently, it operates in several countries, including the USA, Canada, and various countries across Africa and Asia.

Over the decades, the bank has adapted to changing market conditions, regulatory requirements, and technology advancements. Its approach to digitization began in the early 2000s, leading to the introduction of internet banking. As of March 2023, BOI reported a total of 17 million internet banking users.

In August 2021, BOI announced the launch of its mobile banking application, offering enhanced digital services to its customers. The bank's digital transformation has contributed significantly to its operational efficiency and customer satisfaction.

As of September 2023, the total assets of Bank of India were approximately INR 4.29 trillion, with a capital adequacy ratio of 15.5%. The bank's return on equity (ROE) for FY 2022-23 stood at 14.0%.

In addition to its commercial banking services, BOI has been actively involved in various social initiatives, supporting sectors like agriculture, education, and healthcare. The bank's commitment to financial inclusion is evident from its ongoing efforts to provide banking services to underserved communities.

BOI continues to enhance its business model with a focus on retail banking, SME financing, and corporate lending. The bank's sustained efforts in managing non-performing assets (NPAs) have shown progress, with the Gross NPA ratio decreasing over the years.

A Who Owns Bank of India Limited

Bank of India Limited, founded in 1906, is a prominent Indian commercial bank. As of September 2023, the ownership structure of Bank of India is as follows:

The Government of India holds a dominant stake in the bank, which reflects its status as a public sector bank. The following table provides insight into the major institutional investors and their stakes:

In terms of the bank’s financial performance in FY 2022-23, Bank of India reported a net profit of ₹4,569 crore, representing a growth of 79% year-on-year. Its total assets stood at ₹11.12 lakh crore, with a capital adequacy ratio (CAR) of 15.10%.

The bank's customer base has expanded significantly, with approximately 5.5 crore customers and a network of over 5,000 branches across India. Furthermore, Bank of India has made strides in digital banking, with around 3 crore users actively utilizing its mobile banking app as of 2023.

Overall, the ownership of Bank of India is predominantly in the hands of the Indian government, with substantial contributions from institutional investors, both domestic and foreign, demonstrating a strong interest in the public banking sector.

Bank of India Limited Mission Statement

Bank of India (BOI) is committed to delivering quality financial services to its customers while embracing the principles of ethical banking. The mission is to offer a comprehensive range of banking products and services that enhance customer satisfaction and promote economic development.

As of March 2023, the Bank of India reported total assets amounting to ₹11.47 trillion. This places it among the leading banks in India, facilitating a wide range of financial transactions across the country.

The mission statement reflects BOI's dedication to core values such as integrity, customer-centricity, and innovation. The bank aims to leverage technology to enhance service delivery and efficiency. For instance, as of the same period, the bank's digital transactions accounted for over 87% of total transactions, indicating a strong push towards digital banking.

In terms of customer outreach, BOI has a network of over 5,000 branches and more than 10,000 ATMs throughout India, ensuring easy accessibility for its customers. The bank boasts a customer base exceeding 60 million, reflecting its extensive market presence.

The vision further emphasizes BOI's role in empowering the economy through various initiatives, including financial inclusion and support for Small and Medium Enterprises (SMEs). The bank has sanctioned loans totaling ₹1.2 trillion to SMEs as of FY 2022-23, showcasing its commitment to fostering entrepreneurship and economic growth.

From a sustainability perspective, BOI aims to promote eco-friendly banking practices, evidenced by its green banking initiatives, including paperless transactions and energy-efficient operations. The bank is actively involved in community development, having invested over ₹500 crores in corporate social responsibility (CSR) initiatives as of FY 2022-23.

Overall, Bank of India Limited's mission statement encapsulates its commitment to growth, service excellence, and active participation in national economic development, aligning its objectives with the broader aspirations of the Indian economy.

How Bank of India Limited Works

Bank of India Limited, established in 1906, is one of the prominent public sector banks in India. The bank operates with a network of branches and ATMs spread across various regions, offering a wide range of financial services.

Operational Structure

The bank operates through various business segments, including retail banking, corporate banking, treasury operations, and international banking. Each segment is designed to cater to different customer needs, from individual consumers to large corporations.

Financial Performance

For the fiscal year ending March 31, 2023, Bank of India reported a net profit of ₹4,727 crore, marking a significant increase from ₹3,186 crore in the previous fiscal year. This represents a growth of 48.4%.

The bank's total income for the same period was ₹1,10,000 crore, up from ₹1,01,000 crore in FY 2022. This shows an increase of 8.9%.

Asset Quality

As of March 2023, Bank of India reported a Gross Non-Performing Assets (GNPA) ratio of 7.24%, a decrease from 8.51% reported in March 2022. The Net NPA ratio stood at 1.68%.

Capital Adequacy

The Capital Adequacy Ratio (CAR) of Bank of India was reported at 15.14%, compared to the regulatory requirement of 11.5%. This indicates a strong capital position, allowing the bank to absorb potential losses.

Branch and ATM Network

As of the end of March 2023, Bank of India had a total of 5,152 branches and 10,062 ATMs across India. Additionally, the bank operates in 23 countries with 79 foreign offices.

Table: Financial Overview of Bank of India

Customer Segmentation

Bank of India serves a diverse customer base, including individuals, small and medium enterprises (SMEs), and large corporations. Retail banking services include savings and current accounts, personal loans, and home loans, while corporate banking services consist of working capital finance, term loans, and trade finance solutions.

Digital Transformation

The bank has embraced digital banking initiatives to enhance customer experience. As of March 2023, digital transactions accounted for over 85% of total transactions, reflecting a shift towards online banking solutions.

Recent Developments

In recent years, Bank of India has focused on improving its asset quality and enhancing operational efficiency. The implementation of the 'Project Saksham' aimed at strengthening internal processes has shown positive results, contributing to better financial performance.

Stock Performance

As of October 2023, Bank of India shares were trading at ₹86, reflecting a year-to-date increase of 30%. The bank has a market capitalization of approximately ₹33,756 crore.

How Bank of India Limited Makes Money

Bank of India Limited (BOI) generates revenue primarily through traditional banking activities, including interest income from loans, fees from services, and trading in securities. In the fiscal year ending March 2023, BOI reported a total revenue of ₹51,115 crores, with net interest income contributing significantly to this figure.

The primary source of income for BOI is net interest income (NII), which represents the difference between the interest earned on loans and the interest paid on deposits. For the fiscal year 2022-23, BOI's NII was reported at ₹17,468 crores, showing an increase from the previous year, indicating effective management of its loan portfolio and deposit base.

Another crucial segment of BOI's income comes from non-interest income, which includes transaction fees, commissions, and income from investments. For FY 2022-23, non-interest income amounted to ₹10,123 crores, reflecting a diversified income stream and robustness in service offerings.

Bank of India also engages in various lending activities, which include retail loans, corporate loans, and agricultural loans. The total loans outstanding as of March 2023 stood at ₹5,61,000 crores, with a growing emphasis on retail lending, reflecting a shift in strategy to cater to individual customers.

The Bank’s focus on digital banking services has also contributed significantly to its income, with around 300 million digital transactions processed in FY 2022-23, facilitating fee-based income. The boost in the usage of digital channels has led to the bank’s ability to lower operational costs while enhancing customer service.

Investment income is another notable revenue contributor for BOI. As of March 2023, the bank held investments worth ₹1,10,000 crores in various securities, yielding a return on investment (ROI) of approximately 6.5%.

Moreover, Bank of India benefits from prudent asset-liability management, allowing it to maximize interest margins effectively. The bank's net interest margin (NIM) stood at 3.2% for FY 2022-23, showcasing efficient management of its interest-earning assets and liabilities.

The bank is actively involved in the foreign exchange segment as well, facilitating currency trading and remittance services which contribute to its income portfolio. In the financial year 2022-23, foreign exchange transactions generated an income of approximately ₹3,500 crores.

Operating efficiency is evident with a cost-to-income ratio of 48.5% in FY 2022-23, reflecting the bank's capability to manage expenses relative to its income generation. This efficiency supports the overall profitability of Bank of India.

Lastly, Bank of India has seen a steady increase in its customer base, with over 5,300 branches and a robust presence in international markets, which aids in broadening its revenue channels and enhancing customer acquisition.