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City Union Bank has reported 16% growth in net profit at Rs 167.99 crore for the quarter ended September 2018. The bank has posted healthy 12% growth in net interest income (NII), while the core fee income of the bank also improved 20% in Q2FY2019. The Net Interest Margin (NIM) of the bank improved to 4.32% in Q2FY2019 from 4.24% in the previous quarter.
On business front, the bank as has posted 14% growth in business with strong 17% surge in loan book. The asset quality of the bank was stable in Q2FY2019. Bank has further improved the credit to deposit ratio to 86.2% at end September 2018 from 82.2% at end September 2017. The CASA ratio of the bank has been steady at 23.6% at end September 2018 from 23.0% at end September 2017.
Asset quality stable: The bank has maintained stable asset quality in Q2FY2019.
- The fresh slippages of loans stood at Rs 136.2 crore in Q2FY2019, while the recovery, upgradations and write-off together were higher at Rs 139.4 crore.
- The restructured advances book stood at mere Rs 5.7 crore at end September 2018.
- The stressed assets (NNPA and Standard restructured asset) of the bank stood at 1.69% of advances at end September 2018 from 1.80% end September 2017.
Asset Quality Indicators: City Union Bank
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201809 |
201806 |
201803 |
201712 |
201709 |
Variation |
| QoQ |
YTD |
YoY |
| Gross NPA (Rs Crore) |
847.88 |
851.12 |
856.55 |
859.79 |
780.39 |
0 |
-1 |
9 |
| Net NPA (Rs Crore) |
497.78 |
473.49 |
474.78 |
447.82 |
440.98 |
5 |
5 |
13 |
| % Gross NPA |
2.85 |
3.02 |
3.03 |
3.30 |
3.07 |
-17 |
-18 |
-22 |
| % Net NPA |
1.69 |
1.70 |
1.70 |
1.74 |
1.76 |
-1 |
-1 |
-7 |
| % Provision Coverage Ratio |
65.00 |
65.00 |
64.00 |
65.00 |
63.00 |
0 |
100 |
200 |
| % CRAR - Basel III |
15.11 |
16.06 |
16.22 |
14.93 |
15.31 |
-95 |
-111 |
-20 |
| Tier I - Basel III % |
14.71 |
15.64 |
15.79 |
14.47 |
14.86 |
-93 |
-108 |
-15 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Healthy business growth: The business of the bank has increased 14% YoY to Rs 64319 crore end September 2018, driven by 17% surge in advances to Rs 29785 crore. Deposits rose 12% to Rs 34534 crore at end September 2018.
CASA deposits ratio stable: The CASA deposits of the bank increased 15% YoY to Rs 8164 crore at end September 2018. The CASA ratio was stable at 23.6% at end September 2018 compared to 23.9% a quarter ago and 23.0% a year ago.
Healthy loan growth: Advances growth was driven by retail loans rising 25% YoY to Rs 3638 crore at end September 2018, while credit to large industries also increased 8% to Rs 1947 crore and wholesale traders 14% to Rs 4050 crore and MSME 17% to Rs 10056 crore at end September 2018. The credit to agriculture jumped 17% YoY to Rs 4428 crore at end September 2018.
The share of secured loans rose marginally to 98.9% at end September 2018 from 98.7% at end September 2017. The share of retail, agriculture and MSME loans also rose to 60.8% at end September 2018 from 60.1% a year ago.
Investment book of the bank increased 9% YoY to Rs 8174 crore at end September 2018. The AFS book jumped 44% to Rs 1965 crore, while HTM book rose 1% to Rs 6209 crore at end September 2018. The AFS book duration stood at 1.19 years with the overall investment portfolio duration at 4.18 years at end September 2018.
Margins improve: The bank has showed sharp 11 bps qoq decline in cost of funds to 5.10%, while yield on fund declined only 6 bps qoq to 8.94% in Q2FY2019. Thus, the NIM has improved 8 bps qoq to 4.32%.
Branch expansion: The bank has added 6 branches, 1 ATMs and 153 staff in Q2FY2019, taking overall tally to 607 branches and 1635 ATM's and 5406 employees end September 2018.
Book value of the bank stood at Rs 61.1 per share at end September 2018, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 54.3 per share at end September 2018.
Quarterly Performance
NII rises as NIM improves: Bank has recorded 10% increase in the interest earned at Rs 926.49 crore, while interest expenses declined 9% to Rs 528.46 crore in Q2FY2019. NII improved 12% to Rs 398.03 crore in the quarter ended September 2018.
Healthy growth in the core fee income: Bank has posted strong 20% growth in core fee income to Rs 69 crore. However, the treasury income declined 67% to Rs 21 crore and recoveries and other income also dipped 15% to Rs 28 crore, causing 24% dip in the overall non-interest income to Rs 118.55 crore in the quarter ended September 2018.
Expenses ratio rises on dip in treasury income: The operating expenses of the bank increased 16% to Rs 220.63 crore, as other expenses moved up 19% to Rs 127.63 crore, while employee expenses rose 12% to Rs 93 crore in Q2FY2019.
Cost to income ratio increased 42.7% in Q2FY2019 compared with 37.3% in Q2FY2018, causing 8% decline in the Operating Profit to Rs 295.95 crore.
Provisions and contingencies decline: The bank has showed sharp 47% decline in provisions to Rs 67.96 crore.
Effective tax rate rose to 26.3% in Q2FY2019 from 24.1% in Q2FY2018. Net Profit increased 16% YoY to Rs 167.99 crore during quarter ended September 2018.
Half Yearly Financial Performance:
Bank has posted 16% increase in net profit to Rs 329.64 crore in the half year ended September 2018. The net interest income increased 11% to Rs 772.80 crore, while non-interest income declined 15% to Rs 247.67 crore. Net total income rose 3% to Rs 1020.47 crore in H1FY2019. The operating expenses increased 15% to Rs 425.11 crore, while provision and contingencies dipped 41% to Rs 145.72 crore, allowing profit before tax to increase 21% to Rs 449.64 crore in H1FY2019. The cost-to-income ratio improved to 41.7% in H1FY2019 compared to 37.5% in H1FY2018. An effective tax rate rose to 26.7% in H1FY2019 compared to 23.2% in H1FY2018. The net profit has increased 16% to Rs 329.64 crore in H1FY2019.
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