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http://content.icicidirect.com/mailimages/ICICIdirect_CityUnionBank_Q4FY12.pdf
H e a l t h y a l l - r o u n d p e r f o rma n c e…
City Union Bank (CUB) reported a PAT of | 72 crore above our estimate of
| 64.9 crore, thereby registering strong 40.1% YoY growth. A healthy
operating performance and improvement in asset quality were key
highlights of the results. NII growth was healthy sequentially (up 11.3%
QoQ to | 136.7 crore) (I direct estimate: | 138 crore) as NIM improved 15
bps QoQ. Strong advances growth of 31% YoY and 10% QoQ to | 12137
crore leading to ~270 bps QoQ rise in CD ratio and an improvement in
CASA ratio to 18.2% from 16.8% in Q3FY12 aided a sequential increase in
NIM. Non-interest income posted robust growth of 36% YoY to | 61
crore, primarily on account of 21% YoY growth in fee income (comprising
62%) and strong growth in treasury income. Asset quality witnessed an
improvement with GNPA ratio declining by 16 bps sequentially to 1%.
Going forward, we expect NII and PAT to grow at a CAGR of 28% and
26%, respectively, over FY12-14E.
Outlook – We expect the bank to maintain healthy traction in advances
and factor in 26% CAGR over FY12-14E. We expect asset quality to
remain stable as the bank’s exposure to stressed sectors like aviation is
nil while exposure to SEB is merely | 50 crore. Management has guided
NIM to decline slightly to ~3.3%. We estimate NIM at 3.2% for FY13E.
Valuation- The bank has consistently posted excellent return ratios with
RoA of >1.5% and RoE of >20% for the past 13 quarters. Going forward,
we expect the bank to maintain healthy return ratios with RoA at 1.7% on
account of healthy business growth and stable asset quality. A rights
issue of | 400 crore is also expected. We maintain our target price of | 57,
valuing the bank at 1.5x FY13E ABV.
Key highlights of quarter
ƒ Fresh slippage were | 31 crore as against | 50 crore in Q3FY12. The
slippage ratio improved to 1.4% from 2.2% in Q3FY12. Further
w/offs were to the tune of | 17 crore and recovery and upgrades
were | 20 crore leading to absolute GNPA declining by 4% QoQ
ƒ No fresh restructuring was done in Q4FY12 and the outstanding
restructured book stood at | 268.5 crore (2.2% of loans)
ƒ Despite a decline in provisions for NPA on a YoY basis, the
provision coverage ratio improved to 76.8%
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_CityUnionBank_Q4FY12.pdf
H e a l t h y a l l - r o u n d p e r f o rma n c e…
City Union Bank (CUB) reported a PAT of | 72 crore above our estimate of
| 64.9 crore, thereby registering strong 40.1% YoY growth. A healthy
operating performance and improvement in asset quality were key
highlights of the results. NII growth was healthy sequentially (up 11.3%
QoQ to | 136.7 crore) (I direct estimate: | 138 crore) as NIM improved 15
bps QoQ. Strong advances growth of 31% YoY and 10% QoQ to | 12137
crore leading to ~270 bps QoQ rise in CD ratio and an improvement in
CASA ratio to 18.2% from 16.8% in Q3FY12 aided a sequential increase in
NIM. Non-interest income posted robust growth of 36% YoY to | 61
crore, primarily on account of 21% YoY growth in fee income (comprising
62%) and strong growth in treasury income. Asset quality witnessed an
improvement with GNPA ratio declining by 16 bps sequentially to 1%.
Going forward, we expect NII and PAT to grow at a CAGR of 28% and
26%, respectively, over FY12-14E.
Outlook – We expect the bank to maintain healthy traction in advances
and factor in 26% CAGR over FY12-14E. We expect asset quality to
remain stable as the bank’s exposure to stressed sectors like aviation is
nil while exposure to SEB is merely | 50 crore. Management has guided
NIM to decline slightly to ~3.3%. We estimate NIM at 3.2% for FY13E.
Valuation- The bank has consistently posted excellent return ratios with
RoA of >1.5% and RoE of >20% for the past 13 quarters. Going forward,
we expect the bank to maintain healthy return ratios with RoA at 1.7% on
account of healthy business growth and stable asset quality. A rights
issue of | 400 crore is also expected. We maintain our target price of | 57,
valuing the bank at 1.5x FY13E ABV.
Key highlights of quarter
ƒ Fresh slippage were | 31 crore as against | 50 crore in Q3FY12. The
slippage ratio improved to 1.4% from 2.2% in Q3FY12. Further
w/offs were to the tune of | 17 crore and recovery and upgrades
were | 20 crore leading to absolute GNPA declining by 4% QoQ
ƒ No fresh restructuring was done in Q4FY12 and the outstanding
restructured book stood at | 268.5 crore (2.2% of loans)
ƒ Despite a decline in provisions for NPA on a YoY basis, the
provision coverage ratio improved to 76.8%
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