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City Union Bank has posted net loss of Rs 95.28 crore for the quarter ended March 2020 due to overall weak performance and surge in provisions. The net interest income as well as core fee income of the bank was flat on yoy basis in Q4FY2020. The Net Interest Margin (NIM) of the bank dipped to 3.91% in Q4FY2020 compared to 4.40% in the corresponding quarter of previous year.
On business front, the bank as has posted 5% growth in business with strong 5% rise in loan book. The asset quality of the bank deteriorated in Q4FY2020. Bank has showed decline in the credit to deposit ratio to 84.7% at end March 2020 from 86.0% at end March 2019. The CASA ratio of the bank was stable at 25.0% at end March 2020 from 25.2% at end March 2019.
Asset quality weakens: The bank has witnessed moderation in the asset quality with the jumps in fresh slippages of loans in Q4FY2020.
The fresh slippages of loans stood at Rs 480.7 crore in Q4FY2020, while the recovery, upgradations and write-off together were higher at Rs 252.7 crore.
The restructured advances book increased to Rs 297.1 crore at end March 2020.
The stressed assets (NNPA and Standard restructured asset) of the bank stood at 3.11% of advances at end March 2020 from 1.94% end March 2019.
| Asset Quality Indicators: City Union Bank |
|
Mar-20 |
Dec-19 |
Sep-19 |
Jun-19 |
Mar-19 |
Variation |
| QoQ |
YoY |
| Gross NPA (Rs Crore) |
1413.40 |
1185.43 |
1135.44 |
1076.22 |
977.05 |
19 |
45 |
| Net NPA (Rs Crore) |
778.49 |
649.41 |
624.08 |
599.96 |
591.46 |
20 |
32 |
| % Gross NPA |
4.09 |
3.50 |
3.41 |
3.34 |
2.95 |
59 |
114 |
| % Net NPA |
2.29 |
1.95 |
1.90 |
1.89 |
1.81 |
34 |
48 |
| % Provision Coverage Ratio |
65.00 |
65.00 |
65.00 |
65.00 |
63.00 |
0 |
200 |
| % CRAR - Basel III |
16.76 |
15.41 |
15.49 |
15.68 |
15.55 |
135 |
121 |
| Tier I - Basel III % |
15.80 |
14.86 |
14.96 |
15.68 |
15.03 |
94 |
77 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Business growth eases: The business of the bank has increased 5% YoY to Rs 75409 crore end March 2020, driven by 5% rise in advances to Rs 34576 crore. Deposits rose 6% to Rs 40833 crore at end March 2020.
CASA deposits ratio declines: The CASA deposits of the bank rose 5% YoY to Rs 10197 crore at end March 2020. The CASA ratio declined to 25.0% at end March 2020 compared to 25.2% at end March 2019.
Loan growth eases: Advances growth was driven by retail loans rising 6% YoY to Rs 4014 crore at end March 2020, while credit to wholesale traders moved up 5% to Rs 4807 crore and MSME 5% to Rs 10753 crore at end March 2020. The credit to agriculture moved up 12% YoY to Rs 5464 crore at end March 2020. However, the credit to large industries declined 4% to Rs 2139 crore end March 2020.
The share of secured loans was flat at 99.2% at end March 2020 from 99.2% at end March 2019. The share of retail, agriculture and MSME loans moved up to 58.5% at end March 2020 from 57.3% a year ago.
Investment book of the bank surged 17% YoY to Rs 9236.2 crore at end March 2020. The AFS book rose 1% to Rs 1552 crore, while HTM book jumped 22% to Rs 7684 crore at end March 2020. The AFS book duration stood at 0.82 years with the overall investment portfolio duration at 3.78 years at end March 2020.
Margins dip: The bank has showed sharp 21 bps YoY decline in cost of funds to 5.03%, while yield on fund also dipped 72 bps YoY to 8.43% in Q4FY2020. Thus, the NIM has fell 49 bps YoY to 3.91%.
Branch expansion: The bank has added 40 branches and 36 ATMs in Q4FY2020, taking overall tally to 700 branches and 1793 ATM's end March 2020. The employee base of the bank stood at 5741 employees.
Book value of the bank stood at Rs 71.8 per share at end March 2020, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 60.9 per share at end March 2020.
Quarterly Performance
NII flat as NIM dips: Bank has recorded 6% increase in the interest earned at Rs 1041.68 crore, while interest expenses jumped 10% to Rs 622.18 crore in Q4FY2020. NII was flat at Rs 419.50 crore in the quarter ended March 2020.
Fee income flat, treasury income jumps: Bank has posted flat core fee income at Rs 78 crore, while the recoveries and other income dipped 48% to Rs 23 crore. However, the treasury income surged 209% to Rs 79 crore, supporting 22% rise in the overall non-interest income to Rs 179.31 crore in the quarter ended March 2020.
Expenses ratio jumps: The operating expenses of the bank increased 15% to Rs 263.71 crore, as other expenses moved up 23% to Rs 169.88 crore, while employee expenses rose 3% to Rs 93.83 crore in Q4FY2020. Cost to income ratio jumped to 44.0% in Q4FY2020 compared with 40.5% in Q4FY2019, leading to 1% decline in the Operating Profit to Rs 335.10 crore.
Provisions and contingencies jumps: The bank has showed 397% jump in provisions to Rs 450.38 crore. The pre-tax loss came in at Rs 115.28 crore in Q4FY2020. The bank has written back tax provisions of Rs 20 core, helping to reduce net loss of Rs 95.28 crore in Q4FY2020.
Financial Performance FY2020:
Bank has posted 30% decline in the net profit to Rs 476.32 crore in the year ended March 2020. The net interest income rose 4% to Rs 1675.19 crore, while non-interest income moved 32% to Rs 679.95 crore. The net total income moved up 11% to Rs 2355.14 crore in FY2020. The cost-to-income ratio increased to 43.0% in FY2020 compared to 41.7% in FY2019. The operating expenses increased 14% to Rs 1013.74 crore, while provision and contingencies zoomed 140% to Rs 755.08 crore, leading to 37% dip in profit before tax to Rs 586.32 crore in FY2020. An effective tax rate rose to 18.8% in FY2020 compared to 26.2% in FY2019. The net profit has fell 30% to Rs 476.32 crore in FY2020.
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