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Q3FY12 – Business growth above industry, asset quality concern remains
• The bank reported decline in PAT of 13.2% Y-o-Y in Q3FY12 mainly due to higher growth of 31%
Y-o-Y in staff cost as the bank made provisions for staff welfare.
• NII has grown by 10.7% Y-o-Y as margins for the bank improved on sequential basis in Q3FY12.
• NIM stood at 2.9% in Q3FY12 vs 2.6% in Q2FY12.
• Advances have grown by 21.9% Y-o-Y and deposits grew by 20.8% Y-o-Y in Q3FY12.
• Asset quality improved as Gross NPA stood at 2.9% in Q3FY12 vs 3.0% in Q2FY12.
Result Highlights
Margins improve sequentially on back of higher yield on advances
NIM stood at 2.9% improving by 28bps Q-o-Q basis as yield on funds increased by 48bps Q-o-Q basis
to 9.54% against 25bps increase in cost of funds Q-o-Q basis to 6.95% in Q3FY12. Major reason for
low growth in cost of funds was decrease in bulk deposits from `406.2 bn in Q2FY12 to `194.9 bn in
Q3FY12. CASA deposits stood at 22.28% in Q3FY12.
Business growth remained above industry average
Advances for the bank has grown by 21.9% Y-o-Y basis and deposits by 20.8% Y-o-Y basis taking CD
ratio to 70.9% in Q3FY12. The bank has achieved its priority lending targets as set by RBI.
Management expects to achieve 20% growth in business in FY13E.
Asset quality improved, restructure book to increase by `~30 bn in Q4FY12.
Gross NPA has come down but restructured book increased to `75.98 bn as additional amount to
the tune of `28.5 bn got restructured in Q3FY12. The bank expects additional amount to the tune
of `30 bn to get restructured in Q4FY12. Out of this amount of `15 bn is towards Air India. The
banks total restructure loan book stands at 5.5% of total loan book as on Q3FY12. If additional
amount gets restructured then total percentage will increase to 8.2% of total loan book. Fresh
restructured loan book includes Uttar Haryana SEB (exposure of `9 bn) and GTL (exposure of `6 bn)
in Q3FY12.
During the quarter, there was fresh slippage of `3.36 bn from agri segment, as per management
there was recovery of `2 bn in month of Jan’ 12 from this fresh slippages.
Other updates
The bank had lower tax rate during quarter as provisions on restructured loan book give tax
benefit. There was treasury gain of `365 mn in Q3FY12. Retail segment saw fresh slippages of `1.55
bn in Q3FY12.
Valuation & Viewpoint
The bank has performed well above industry growth but concerns on asset quality are still not over.
Almost 3% of its loan book is in pipeline to get restructure which could add to low interest income
and fresh slippages to NPA. At CMP, the stock is trading at 0.65x and 0.59x book value of FY12E and
FY13E.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Q3FY12 – Business growth above industry, asset quality concern remains
• The bank reported decline in PAT of 13.2% Y-o-Y in Q3FY12 mainly due to higher growth of 31%
Y-o-Y in staff cost as the bank made provisions for staff welfare.
• NII has grown by 10.7% Y-o-Y as margins for the bank improved on sequential basis in Q3FY12.
• NIM stood at 2.9% in Q3FY12 vs 2.6% in Q2FY12.
• Advances have grown by 21.9% Y-o-Y and deposits grew by 20.8% Y-o-Y in Q3FY12.
• Asset quality improved as Gross NPA stood at 2.9% in Q3FY12 vs 3.0% in Q2FY12.
Result Highlights
Margins improve sequentially on back of higher yield on advances
NIM stood at 2.9% improving by 28bps Q-o-Q basis as yield on funds increased by 48bps Q-o-Q basis
to 9.54% against 25bps increase in cost of funds Q-o-Q basis to 6.95% in Q3FY12. Major reason for
low growth in cost of funds was decrease in bulk deposits from `406.2 bn in Q2FY12 to `194.9 bn in
Q3FY12. CASA deposits stood at 22.28% in Q3FY12.
Business growth remained above industry average
Advances for the bank has grown by 21.9% Y-o-Y basis and deposits by 20.8% Y-o-Y basis taking CD
ratio to 70.9% in Q3FY12. The bank has achieved its priority lending targets as set by RBI.
Management expects to achieve 20% growth in business in FY13E.
Asset quality improved, restructure book to increase by `~30 bn in Q4FY12.
Gross NPA has come down but restructured book increased to `75.98 bn as additional amount to
the tune of `28.5 bn got restructured in Q3FY12. The bank expects additional amount to the tune
of `30 bn to get restructured in Q4FY12. Out of this amount of `15 bn is towards Air India. The
banks total restructure loan book stands at 5.5% of total loan book as on Q3FY12. If additional
amount gets restructured then total percentage will increase to 8.2% of total loan book. Fresh
restructured loan book includes Uttar Haryana SEB (exposure of `9 bn) and GTL (exposure of `6 bn)
in Q3FY12.
During the quarter, there was fresh slippage of `3.36 bn from agri segment, as per management
there was recovery of `2 bn in month of Jan’ 12 from this fresh slippages.
Other updates
The bank had lower tax rate during quarter as provisions on restructured loan book give tax
benefit. There was treasury gain of `365 mn in Q3FY12. Retail segment saw fresh slippages of `1.55
bn in Q3FY12.
Valuation & Viewpoint
The bank has performed well above industry growth but concerns on asset quality are still not over.
Almost 3% of its loan book is in pipeline to get restructure which could add to low interest income
and fresh slippages to NPA. At CMP, the stock is trading at 0.65x and 0.59x book value of FY12E and
FY13E.
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