Equity Analysis

• The bank has maintained strong growth in operating profit which has increased 26% in FY2019. The operating profit excluding treasury profit has jumped 69% in FY2019.
• The domestic loan growth of the bank has higher than the system credit growth at 14% end March 2019. About 88% of the fresh sanctions were in A and above rated category in FY2019.
• The bank has acquired 45 lakh customers in the year ended March 2019, of which 32 lakh were added in the saving account side.
• The credit risk weighted assets have declined sharply from 64.9% end March 2018 to 48.7% end March 2019. The bank has exhibited sharp decline of Rs 51000 crore in its risk weighted assets during the year ended March 2019.
• The bank has more than doubled recoveries of NPAs to Rs 20000 crore in FY2019. The bank remains quite optimistic on the recovery front, and expects higher recoveries of NPAs of Rs 25000 crore for FY2020 including Rs 5000 crore from recovery of Essar Steel and Bhushan Power and Steel that was expected in FY19.
• The bank has taken number of steps to support and strengthen its asset quality and recorded sharp decline in GNPA ratio to 15.5% and NNPA ratio to 6.56% end March 2019
• The bank has recorded strong increase in provision coverage ratio to 74.5% end March 2019 from 68.9% end December 2018 and 58.4% end March 2019.
• The provisions coverage for NCLT related accounts stand at strong level of 85%. With regard to NCLT exposure, the bank has recorded recovery rate of 63% in FY2019 indicating at adequate provisions.
• The bank has witnessed increased in net slippages of advances in quarter ended March 2019, while the normal slippages were Rs 4400 crore in Q4FY2019.
• The bank has classified its entire exposure to IL&FS group of Rs 1800 crore as NPA in the quarter ended March 2019.
• The bank's exposure to Jet Airways is less than Rs 1000 crore, while bank has made provisions of 15%.
• Under Mudra loans, the bank has exposure of Rs 7 to 8000 crore with NPA ratio of 10%.
• The bank is expecting fresh slippages of Rs 12000 crore +/- 5% for FY2020.
• The SMA 2 category loans of the bank stood at Rs 6000 crore, while the slippers in the SMA book has been around 5 to 10% historically.
• The restructure advance book of the bank stood at Rs 2500 crore end March 2019.
• The bank expects credit cost to be below 3% in FY2020.
• The bank is targeting deposit growth of 8-10% and overall loan growth of 12% for FY2020.
• The bank is targeting Rs 10000 crore from sale of non-core assets and provisions write-back. The bank is expecting Rs 1000 crore from sale of non-financial core asset i.e. its early corporate office at Bhikaji Cama Palace in Delhi. The bank is also expecting Rs 4000-5000 crore from sale of financial assets including stake sale in housing finance and insurance subsidiary. Further, the bank is expecting write-back provisions of Rs 4000-5000 crore from recoveries of NPAs under NCLT.

Powered by Capital Market - Live News