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NII marginally better than estimates, stable NIMs qoq
Net interest income (adjusted for interest income on income tax refund) was up 32% yoy (flat
qoq) and is slightly better than our estimate.
The reported net interest margin remained largely stable qoq at about 2.1% (+46bps yoy).
Total other income was down 9% yoy and came in lower than estimates. Core fee income
declined 16% yoy.
Operating costs increased about 14% yoy. The cost to income ratio (excluding treasury gains)
was about 35% in 1QFY12 (37% in 1QFY11)
Provisions for bad loans were 24bps of loans in 1QFY12 compared to 10bps in 4QFY11.
Note, the 1QFY12 provision includes one time provision of Rs 2.8bn on account of increase in
RBI’s provisioning slab rates for bad loans and provision on standard restructured loans.
Excluding this, the provision charge appears low.
Provision for income tax is 45% of PBT vs. 24% a year ago.
Net profit at Rs 3.35bn (+ 34% yoy) is largely in line with our estimate of Rs 3.5bn
Asset quality and business growth
Asset quality slipped on qoq basis, partly on account of slippages in the SME segment. Gross
NPLs at 2.1% (Rs 32.9bn) as of June 2011 (1.8% - Rs 27.8bn as of March 2011) and net
NPLs are 1.25% as of June 2011 (1.06% as of March 2011). Note, the qoq net increase in
GNPLs is about Rs 5bn and the net increase in net NPLs is Rs 2.5bn. The reported provision
coverage ratio came down qoq to 74% from 74.7%.
Loan book grew 14.6% yoy (-1.3% qoq) to Rs 1,550 bn as of June 2011. The SME segment
constituted about 9% of total loans as of March 2011.
Deposits grew 12% yoy (-2.3% qoq). The low cost deposits (CASA) improved about 430bps
yoy to 17.3% as of June 2011. Of this, savings deposits constitute 7.7% (+120bps yoy) and
current deposits constitute 9.6% (+310bps yoy)
The reported tier I capital ratio was 8.1% as of June 2011.
Profitability and valuation
The reported EPS was Rs 3.4in 1QFY12 (Rs 18.4in FY11). The book value was Rs 138 and
the adjusted (for net NPLs) book value was Rs 112 as of June 2011
The return on assets (annualised ) was 54bps in 1QFY12 (73bps in FY11)
At the current market price, the stock trades at 5.8x FY12F earnings and 0.9x FY12F BV. We
have a Buy rating on IDBI Bank.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NII marginally better than estimates, stable NIMs qoq
Net interest income (adjusted for interest income on income tax refund) was up 32% yoy (flat
qoq) and is slightly better than our estimate.
The reported net interest margin remained largely stable qoq at about 2.1% (+46bps yoy).
Total other income was down 9% yoy and came in lower than estimates. Core fee income
declined 16% yoy.
Operating costs increased about 14% yoy. The cost to income ratio (excluding treasury gains)
was about 35% in 1QFY12 (37% in 1QFY11)
Provisions for bad loans were 24bps of loans in 1QFY12 compared to 10bps in 4QFY11.
Note, the 1QFY12 provision includes one time provision of Rs 2.8bn on account of increase in
RBI’s provisioning slab rates for bad loans and provision on standard restructured loans.
Excluding this, the provision charge appears low.
Provision for income tax is 45% of PBT vs. 24% a year ago.
Net profit at Rs 3.35bn (+ 34% yoy) is largely in line with our estimate of Rs 3.5bn
Asset quality and business growth
Asset quality slipped on qoq basis, partly on account of slippages in the SME segment. Gross
NPLs at 2.1% (Rs 32.9bn) as of June 2011 (1.8% - Rs 27.8bn as of March 2011) and net
NPLs are 1.25% as of June 2011 (1.06% as of March 2011). Note, the qoq net increase in
GNPLs is about Rs 5bn and the net increase in net NPLs is Rs 2.5bn. The reported provision
coverage ratio came down qoq to 74% from 74.7%.
Loan book grew 14.6% yoy (-1.3% qoq) to Rs 1,550 bn as of June 2011. The SME segment
constituted about 9% of total loans as of March 2011.
Deposits grew 12% yoy (-2.3% qoq). The low cost deposits (CASA) improved about 430bps
yoy to 17.3% as of June 2011. Of this, savings deposits constitute 7.7% (+120bps yoy) and
current deposits constitute 9.6% (+310bps yoy)
The reported tier I capital ratio was 8.1% as of June 2011.
Profitability and valuation
The reported EPS was Rs 3.4in 1QFY12 (Rs 18.4in FY11). The book value was Rs 138 and
the adjusted (for net NPLs) book value was Rs 112 as of June 2011
The return on assets (annualised ) was 54bps in 1QFY12 (73bps in FY11)
At the current market price, the stock trades at 5.8x FY12F earnings and 0.9x FY12F BV. We
have a Buy rating on IDBI Bank.
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