Equity Analysis

• The operating profit of the bank has increased 10.6%, while excluding one-off impact of Rs 1900 crore last year, the operating profit has surged 32% in the quarter ended June 2019.
• The bank has maintained overhead expenses under control, but decline in bond yield has caused spike in pension provisions
• The bank has witnessed highest ever average current account deposits growth of 8%.
• The bank has contained GNPA and NNPA ratio, but percentage improvement not visible due to denominator effect.
• The fresh slippages of loans stood at Rs 16212 crore in Q1FY2019, of which Rs 2000 crore came from one PSU account which is serviced regularly and one state has contributed agriculture slippages of Rs 2000 crore. SME slippages were higher in Q1FY2019 due to end of regulatory forbearance.
• Within the overall slippages of Rs 16212 crore, Rs 5354 crore came from corporate segment, Rs 3964 crore from SME, Rs 4239 crore from agriculture, Rs 2438 crore from personal etc.
• On provisions front, the bank has made provisions of Rs 2300 crore for two standard accounts, as its slips to NPA category as per RBI 7 June framework.
• The credit cost of the bank stood at Rs 2.03%, while the bank expects the credit cost to decline ahead.
• The interest income reversals stood at Rs 2791 crore in Q1FY2020 compared with Rs 1243 crore in Q1FY2019.
• The total exposure under MUDRA loans stands at Rs 26000 crore with NPAs of Rs 3500 crore.
• The exposure to Jet Airways stands at Rs 1600 crore which carries provisions of Rs 800 crore.
• As per the bank, the Sashakth program is relevant anymore Post 7 June circular of the RBI. Based on this circular, the bank has identified 46 accounts which are eligible for signing ICA, of which 6 NPAs have been admitted to the NCLT and 2 have been regularized. Of the remaining 38, 18 are NPA accounts and rest 20 accounts are standard.
• The last date for the resolution of Dewan Housing Finance is 6 December 2019.
• The bank has exhibited strong improvement in share of alternate channel to more than 90% of overall channel with digital channel at 56%. The share of ATM channel declined to 29%.

• The bank is targeting loan growth of 12% for FY2020.
• Credit cost estimated at 1.4%, while slippages in FY2020 are expected to be below FY2019.
• Core RoA is expected to be 0.5-0.6% in FY2020, excluding recoveries from NCLT resolutions and sale of assets.
• The bank is targeting net interest margin of 3.15%, while international net interest margin is expected to be 1.2%.
• Corporate slippages run-rate is expected to be at Rs 3000 crore per quarter.
• The subsidiaries of the bank are performing well, while the IPO of cards business is expected by end FY2020.

Powered by Capital Market - Live News