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N o n i n t e r e s t i n c o m e s p u r s p r o f i t a b i l i t y…
It was another quarter with 31% YoY PAT growth but was boosted by
higher FX income component of non interest income leading to 20% YoY
and 14% sequential growth in the latter.
Deposits growth was flat QoQ, up 21% YoY to | 232508 crore as wholesale
term deposits worth ~| 6000 crore were shed on a sequential basis. CASA
stabilised at 47.6%. The loan book growth was healthy at 21% YoY and
2.3% QoQ to | 189917 crore supported by retail loan growth. Hence,
sequential NII growth was up 5.8% to | 3115 crore.
Asset quality remained stable with both the GNPA & NNPA ratios being flat
QoQ at 1% and 0.2% respectively, and PCR (excluding write-offs) at 80.3%
declining from 81.3%. However, in absolute value, GNPA and NNPA grew
7% and 12%, sequentially to | 2021 and | 398 crore, respectively.
Provisions remained lower at | 329 crore but we expect the same to rise.
Margins maintained at 4.1% QoQ as retail loan growth up 30% YoY…
Retail loans grew 30% YoY to | 100347 crore on account of a jump in
CV/CE loans growing 11% QoQ (44% YoY) and credit cards rising 10% QoQ
(42%YoY). Retail now forms 51.6% of total loan book. This along with some
rundown in low yielding corporate loan book led to NIM being maintained
sequentially at 4.1% and NII growth of 12.1% YoY and 5.8% QoQ. We
expect loan growth at 21% CAGR over FY11-13E in line with the
management’s guidance of 3-4% above industry growth.
FX income grows sharply pushing up non interest income…
Forex income grew 68% both YoY and QoQ this quarter to | 365.6 crore
surprisingly pushing overall non interest income growth to 26% YoY to |
1420 crore. About 20% of FX revenue was one-off and was trading and
proprietary related. Also, commission fee income was higher and increased
14% QoQ to | 1127.6 crore.
V a l u a t i o n
At the CMP of | 486, the bank is trading at 3.5x its FY13E ABV. We expect
some accretion in NPL, with rising retail book, and provisions to increase.
We expect 20% CAGR and 29% CAGR in PAT over FY11-13E. Return ratios
are expected to be healthy with RoA of 1.6%+ and RoE of 20%+ over
FY12- 13E. We have valued the bank at 3.8x FY13E ABV and maintained our
target price at | 532. With limited upsides left, we recommend HOLD rating
on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
N o n i n t e r e s t i n c o m e s p u r s p r o f i t a b i l i t y…
It was another quarter with 31% YoY PAT growth but was boosted by
higher FX income component of non interest income leading to 20% YoY
and 14% sequential growth in the latter.
Deposits growth was flat QoQ, up 21% YoY to | 232508 crore as wholesale
term deposits worth ~| 6000 crore were shed on a sequential basis. CASA
stabilised at 47.6%. The loan book growth was healthy at 21% YoY and
2.3% QoQ to | 189917 crore supported by retail loan growth. Hence,
sequential NII growth was up 5.8% to | 3115 crore.
Asset quality remained stable with both the GNPA & NNPA ratios being flat
QoQ at 1% and 0.2% respectively, and PCR (excluding write-offs) at 80.3%
declining from 81.3%. However, in absolute value, GNPA and NNPA grew
7% and 12%, sequentially to | 2021 and | 398 crore, respectively.
Provisions remained lower at | 329 crore but we expect the same to rise.
Margins maintained at 4.1% QoQ as retail loan growth up 30% YoY…
Retail loans grew 30% YoY to | 100347 crore on account of a jump in
CV/CE loans growing 11% QoQ (44% YoY) and credit cards rising 10% QoQ
(42%YoY). Retail now forms 51.6% of total loan book. This along with some
rundown in low yielding corporate loan book led to NIM being maintained
sequentially at 4.1% and NII growth of 12.1% YoY and 5.8% QoQ. We
expect loan growth at 21% CAGR over FY11-13E in line with the
management’s guidance of 3-4% above industry growth.
FX income grows sharply pushing up non interest income…
Forex income grew 68% both YoY and QoQ this quarter to | 365.6 crore
surprisingly pushing overall non interest income growth to 26% YoY to |
1420 crore. About 20% of FX revenue was one-off and was trading and
proprietary related. Also, commission fee income was higher and increased
14% QoQ to | 1127.6 crore.
V a l u a t i o n
At the CMP of | 486, the bank is trading at 3.5x its FY13E ABV. We expect
some accretion in NPL, with rising retail book, and provisions to increase.
We expect 20% CAGR and 29% CAGR in PAT over FY11-13E. Return ratios
are expected to be healthy with RoA of 1.6%+ and RoE of 20%+ over
FY12- 13E. We have valued the bank at 3.8x FY13E ABV and maintained our
target price at | 532. With limited upsides left, we recommend HOLD rating
on the stock.
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