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Union Bank of India
For 3QFY2011, Union Bank of India reported moderate growth of 8.5% yoy ( 91.0% qoq,
mainly on account of lower base) to `580cr, in line with our estimates of `594cr. However,
provisioning expenses were 80.9% higher than estimated, which were offset by higher noninterest
income. NII was in line with our estimates at `1,616cr. Non-interest income
increased by 6.2% yoy. The cost-to-income ratio stood at 40.2% as compared to 44.7% in
2QFY2011 and 40.2% in 3QFY2010. During the quarter, the bank provided `64cr for
gratuity and `120cr for pension liabilities as provisions, similar to last quarter.
Advances grew by healthy 20.7% yoy (3.6% sequentially), main contributors being the retail
and MSME sectors, while deposits grew by 4.8% sequentially and 23.3% yoy. The yield on
funds increased by 11bp, while the cost of funds increased by 10bp, leading to a 9bp
improvement in reported NIMs to 3.44% from 3.35% in 2QFY2011. Gross NPAs increased
by 1.6% qoq to `3,580cr and net NPAs increased by 9.3% qoq to `1,597cr. NPA
provisioning expense for this quarter stands at ~0.7% of the total average assets, which is
relatively high compared to industry average. The provision coverage ratio stood at 70.2%
including technical write-offs, just above the mandated level of 70.0%. At the CMP, the stock
is trading at 1.4x FY2012E ABV. The stock is currently under review.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Union Bank of India
For 3QFY2011, Union Bank of India reported moderate growth of 8.5% yoy ( 91.0% qoq,
mainly on account of lower base) to `580cr, in line with our estimates of `594cr. However,
provisioning expenses were 80.9% higher than estimated, which were offset by higher noninterest
income. NII was in line with our estimates at `1,616cr. Non-interest income
increased by 6.2% yoy. The cost-to-income ratio stood at 40.2% as compared to 44.7% in
2QFY2011 and 40.2% in 3QFY2010. During the quarter, the bank provided `64cr for
gratuity and `120cr for pension liabilities as provisions, similar to last quarter.
Advances grew by healthy 20.7% yoy (3.6% sequentially), main contributors being the retail
and MSME sectors, while deposits grew by 4.8% sequentially and 23.3% yoy. The yield on
funds increased by 11bp, while the cost of funds increased by 10bp, leading to a 9bp
improvement in reported NIMs to 3.44% from 3.35% in 2QFY2011. Gross NPAs increased
by 1.6% qoq to `3,580cr and net NPAs increased by 9.3% qoq to `1,597cr. NPA
provisioning expense for this quarter stands at ~0.7% of the total average assets, which is
relatively high compared to industry average. The provision coverage ratio stood at 70.2%
including technical write-offs, just above the mandated level of 70.0%. At the CMP, the stock
is trading at 1.4x FY2012E ABV. The stock is currently under review.
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