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City Union Bank has reported 17% yoy declined in net profit at Rs 154.05 crore for the quarter ended June 2020, while the earnings performance has recovered from losses in the previous quarter. The bank has posted healthy 5% growth in net interest income (NII), but the core fee income of the bank declined 43% in Q1FY2021. The Net Interest Margin (NIM) of the bank eased to 3.98% in Q1FY2021 compared to 4.11% in the corresponding quarter of previous year.
On business front, the bank has posted 6% growth in business with 7% rise in loan book. The asset quality of the bank was stable in Q1FY2021. Bank has improved the credit to deposit ratio to 84.2% at end June 2020 from 82.5% at end June 2019. The CASA ratio of the bank has moved up to 24.6% at end June 2020 from 23.4% at end June 2019.
Asset Quality: The bank has maintained stable asset quality in Q1FY2021.
- The fresh slippages of loans stood at Rs 3.4 crore in Q1FY2021, while the recovery, upgradations and write-off together were higher at Rs 70.7 crore.
- The restructured advances book stood at Rs 388 crore at end June 2020.
- The stressed assets (NNPA and Standard restructured asset) of the bank stood at 3.20% of advances at end June 2020 from 2.06% end June 2019.
| Asset Quality Indicators: City Union Bank |
|
Jun-20 |
Mar-20 |
Dec-19 |
Sep-19 |
Jun-19 |
Variation |
| QoQ |
YoY |
| Gross NPA (Rs Crore) |
1346.09 |
1413.40 |
1185.43 |
1135.44 |
1076.22 |
-5 |
25 |
| Net NPA (Rs Crore) |
716.35 |
778.49 |
649.41 |
624.08 |
599.96 |
-8 |
19 |
| % Gross NPA |
3.90 |
4.09 |
3.50 |
3.41 |
3.34 |
-19 |
56 |
| % Net NPA |
2.11 |
2.29 |
1.95 |
1.90 |
1.89 |
-18 |
22 |
| % Provision Coverage Ratio |
65.00 |
65.00 |
65.00 |
65.00 |
65.00 |
0 |
0 |
| % CRAR - Basel III |
16.77 |
16.76 |
15.41 |
15.49 |
15.68 |
1 |
109 |
| Tier I - Basel III % |
15.80 |
15.80 |
14.86 |
14.96 |
15.68 |
0 |
12 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Business growth steady: The business of the bank has increased 6% YoY to Rs 75562 crore end June 2020, driven by 7% rise in advances to Rs 34536 crore. Deposits rose 5% to Rs 41026 crore at end June 2020.
CASA deposits ratio improves: The CASA deposits of the bank increased 10% YoY to Rs 10098 crore at end June 2020. The CASA ratio improved to 24.6% at end June 2020 compared to 23.4% at end June 2019.
Loan growth rises: Advances growth was driven by retail loans rising 13% YoY to Rs 4093 crore at end June 2020, while credit to large industries also increased 1% to Rs 2178 crore and wholesale traders 3% to Rs 4504 crore and MSME 3% to Rs 11030 crore at end June 2020. The credit to agriculture moved up 14% YoY to Rs 5433 crore at end June 2020.
The share of secured loans eased marginally to 99.2% at end June 2020 from 99.3% at end June 2019. The share of retail, agriculture and MSME loans rose to 59.5% at end June 2020 from 59.2% a year ago.
Investment book of the bank increased 13% YoY to Rs 9728.5 crore at end June 2020. The AFS book dipped 10% to Rs 1887 crore, while HTM book surged 20% to Rs 7842 crore at end June 2020. The AFS book duration stood at 1.12 years with the overall investment portfolio duration at 4.24 years at end June 2020.
Margins improve on sequential basis: The bank has showed sharp 47 bps YoY decline in cost of funds to 4.90%, while yield on funds declined 62 bps YoY to 8.40% in Q1FY2021. NIM has declined 13 bps YoY but improved 7 bps qoq to 3.98%.
Branch distribution: The bank has network of 700 branches and 1788 ATM's and 5743 employees end June 2020.
Book value of the bank stood at Rs 73.9 per share at end June 2020, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 63.7 per share at end June 2020.
Quarterly Performance
NII rises as NIM improves qoq: Bank has recorded 2% increase in the interest earned at Rs 1049.36 crore, while interest expenses were flat at Rs 612.40 crore in Q1FY2021. NII improved 5% to Rs 436.96 crore in the quarter ended June 2020.
Core fee income declines, treasury income spurts: Bank has posted steep 43% decline in core fee income to Rs 46 crore, while the recoveries and other income declined 83% to Rs 7 crore. However, the treasury income surged 143% to Rs 109 crore. The overall non-interest income declined 2% to Rs 160.59 crore in the quarter ended June 2020.
Expenses ratio rises: The operating expenses of the bank increased 6% to Rs 241.51 crore, as employee expenses surged 16% to Rs 116.42 crore in Q1FY2021 and other expenses declined 3% to Rs 125.09 crore. Cost to income ratio rose to 40.4% in Q1FY2021 compared with 39.4% in Q1FY2020, allowing the operating profit to increase 1% to Rs 356.04 crore.
Provisions surges: The bank has showed 36% surged in provisions to Rs 157 crore.
Effective tax rate rose to 22.6% in Q1FY2021 from 21.2% in Q1FY2020. Net Profit declined 17% YoY to Rs 154.05 crore during quarter ended June 2020.
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 dipped 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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