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C o r e b u s i n e s s s t e e r s P A T g r o w t h …
South Indian Bank (SIB) recorded splendid business growth of 27.5% YoY
to | 58,884 crore. Incremental NII of | 68.7 crore YoY (33.5% YoY growth)
led the incremental PBT and PAT of | 43.8 crore YoY and | 26.9 crore
YoY, respectively. The bank posted non-interest income of | 59.9 crore in
Q3FY12, thereby registering 20.4% YoY growth. Trading income was
muted, excluding which non-interest income growth stood at 35.7%.
Operating expenses surged 29.3% YoY while provisions were flat
sequentially. SIB recorded highest ever PAT of | 102.2 crore (35.7% YoY
growth) in line with our estimates.
ƒ Credit growth clocks ~30% YoY for ninth consecutive quarter
Gold loan (71% YoY growth to | 6513 crore) & corporate credit
(~40% YoY growth to | 4352 crore) were major drivers for credit
reaching | 25,050 crore in Q3FY12. Agriculture credit may pick up
pace and support Q4FY12E growth. We have revised both our
FY12E & FY13E credit growth target from 23% YoY to 25% YoY.
ƒ NIM expected to remain stable at 2.8-3.0%
SIB improved NIM by 2 bps YoY in 9MFY12 to 3.1%. Deregulation of
NRE deposits interest rate is likely to inch up CoD (| 831 cr NRE Term
deposits exposed). Also, the shorter duration of gold loans could
mean re-pricing at lower rates as RBI cuts rates. Even rising
corporate exposure (low yielding credit) may keep NIM under check.
ƒ GNPA ratio showcasing downward trend
GNPA has increased by | 4 crore sequentially in absolute terms to
| 234.4 crore while the GNPA ratio has consistently improved from
2.20% in Q4FY09 to 0.94% in Q3FY12. Increasing exposure to the
corporate book in the current environment remains a downside risk.
V a l u a t i o n
A consistent all-round performance makes SIB a safer bet in the current
uncertain scenario. We have revised our PAT estimates from | 430 crore
to | 469 crore (26.6% CAGR over FY11-13E). SIB is planning capital
raising of | 1000-crore as the market improves (CAR of 12% in
Q3FY12). We expect SIB to deliver RoA of 1% and RoE of 17.6% in
FY13E. We maintain our target price of | 26.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
C o r e b u s i n e s s s t e e r s P A T g r o w t h …
South Indian Bank (SIB) recorded splendid business growth of 27.5% YoY
to | 58,884 crore. Incremental NII of | 68.7 crore YoY (33.5% YoY growth)
led the incremental PBT and PAT of | 43.8 crore YoY and | 26.9 crore
YoY, respectively. The bank posted non-interest income of | 59.9 crore in
Q3FY12, thereby registering 20.4% YoY growth. Trading income was
muted, excluding which non-interest income growth stood at 35.7%.
Operating expenses surged 29.3% YoY while provisions were flat
sequentially. SIB recorded highest ever PAT of | 102.2 crore (35.7% YoY
growth) in line with our estimates.
ƒ Credit growth clocks ~30% YoY for ninth consecutive quarter
Gold loan (71% YoY growth to | 6513 crore) & corporate credit
(~40% YoY growth to | 4352 crore) were major drivers for credit
reaching | 25,050 crore in Q3FY12. Agriculture credit may pick up
pace and support Q4FY12E growth. We have revised both our
FY12E & FY13E credit growth target from 23% YoY to 25% YoY.
ƒ NIM expected to remain stable at 2.8-3.0%
SIB improved NIM by 2 bps YoY in 9MFY12 to 3.1%. Deregulation of
NRE deposits interest rate is likely to inch up CoD (| 831 cr NRE Term
deposits exposed). Also, the shorter duration of gold loans could
mean re-pricing at lower rates as RBI cuts rates. Even rising
corporate exposure (low yielding credit) may keep NIM under check.
ƒ GNPA ratio showcasing downward trend
GNPA has increased by | 4 crore sequentially in absolute terms to
| 234.4 crore while the GNPA ratio has consistently improved from
2.20% in Q4FY09 to 0.94% in Q3FY12. Increasing exposure to the
corporate book in the current environment remains a downside risk.
V a l u a t i o n
A consistent all-round performance makes SIB a safer bet in the current
uncertain scenario. We have revised our PAT estimates from | 430 crore
to | 469 crore (26.6% CAGR over FY11-13E). SIB is planning capital
raising of | 1000-crore as the market improves (CAR of 12% in
Q3FY12). We expect SIB to deliver RoA of 1% and RoE of 17.6% in
FY13E. We maintain our target price of | 26.
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