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South Indian Bank
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Strong results; Asset quality surprises positively
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BUY
CMP: Rs 22 Target Price: Rs 30
n SIB’s Q4FY11 results better than our expectations with net profit of Rs817mn and NII of Rs2.2bn
n 8.2% qoq growth in NII was led by a strong 8.7%qoq growth in advances and stable NIMs at 3.1%. Improvement in yields more than compensated for 33bps increase in cost of funds
n The asset quality surprised positively as the gross and net NPAs were down by 9.2% and 19.2% qoq. The provision cover also improved by 324bpr to 73.9%
n We remain extremely positive with strong RoEs + robust Tier I + clean asset quality. Maintain BUY with price target of Rs30. High gold loan portfolio a key risk
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