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Union Bank of India
For 1QFY2012, Union Bank of India posted a moderate performance, which were
however below our as well as street’s estimates, primarily due to the higher provisioning
(additional `214cr as stated by the bank) done by the bank to meet the RBI’s changed
guidelines for provisioning norms. Consequently, net profit took a hit and declined by
22.8% yoy and 22.3% qoq to `464cr. Advances and deposits witnessed negative growth,
with deposits declining by 1.6% qoq (up 16.1% yoy) and advances declining by 3.6%.
CASA deposits also declined by 2.4% qoq (up 12.4% yoy), leading to a 26bp qoq and
106bp yoy decline in CASA ratio to 31.5%. The bank’s yield on advances increased by
28bp qoq to 9.1%, however cost of funds increased by relatively higher 62bp to 6.2%,
leading to a 34bp sequential decline in reported NIM to 3.1%.
Fee income growth was muted during 1QFY2012, registering just 5.0% yoy growth
compared to yoy loan growth of 16.7%. Operating expenses increased by 22.9% yoy
(down 37.2% sequentially) to `908cr. For 1QFY2012, the bank made a provision of
`101cr towards pension for serving employees and gratuity liabilities.
The stock is trading at 1.1x FY2013E P/ABV, which is below its five-year median of 1.3x.
We maintain Buy on the stock with a target price of `357, based on median level of 1.3x
and implying an upside of 15.4% from current levels.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Union Bank of India
For 1QFY2012, Union Bank of India posted a moderate performance, which were
however below our as well as street’s estimates, primarily due to the higher provisioning
(additional `214cr as stated by the bank) done by the bank to meet the RBI’s changed
guidelines for provisioning norms. Consequently, net profit took a hit and declined by
22.8% yoy and 22.3% qoq to `464cr. Advances and deposits witnessed negative growth,
with deposits declining by 1.6% qoq (up 16.1% yoy) and advances declining by 3.6%.
CASA deposits also declined by 2.4% qoq (up 12.4% yoy), leading to a 26bp qoq and
106bp yoy decline in CASA ratio to 31.5%. The bank’s yield on advances increased by
28bp qoq to 9.1%, however cost of funds increased by relatively higher 62bp to 6.2%,
leading to a 34bp sequential decline in reported NIM to 3.1%.
Fee income growth was muted during 1QFY2012, registering just 5.0% yoy growth
compared to yoy loan growth of 16.7%. Operating expenses increased by 22.9% yoy
(down 37.2% sequentially) to `908cr. For 1QFY2012, the bank made a provision of
`101cr towards pension for serving employees and gratuity liabilities.
The stock is trading at 1.1x FY2013E P/ABV, which is below its five-year median of 1.3x.
We maintain Buy on the stock with a target price of `357, based on median level of 1.3x
and implying an upside of 15.4% from current levels.
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