SME focused: City Union bank is primarily focused on SME /Retail segments and
the exposure to a single client is usually less than Rs50mn. Trading and MSME
comprises 50% of the loan book. Retail Loans contribute 12%, Agriculture 14%,
and Large industries 16%. A large part of its book is linked to working capital
(65%) and almost all lending is done against hard collaterals (mainly real estate
– promoter residence).
Growth Outlook; branch expansion strategy: The bank aims to grow at +25%
and plans to increase branch network to 500 branches by FY15 from ~300
branches currently. ~70% branches are in Tamil Nadu and new incremental
branches will also be of similar geographical spread. Outside TN, CUB is
expanding in centres where clients have business links especially in large textiles
hubs near Ludhiana in North and Gujarat/Maharashtra in West.
Asset Quality‐ Update on textiles: The bank is seeing asset quality concerns on
agri. portfolio (comprising 14%) as there is a tendency on the part of the framers
to delay payments expecting some kind of waivers in the upcoming election.
Textile portfolio is not seeing any issues, though the sector is facing power
shortage issues. Health of spinning industry has improved significantly in the last
12mnts after the crash in cotton prices. In 2011. Overall, smaller ticket sizes and
fully secured lending has been key strengths in CUB’s asset quality and
management continues to remain focused on fully secured hard collateral based
lending.
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