The cost-to-income ratio of the bank increased to 44% in Q3FY2019. Net Interest Margin (NIM) was stable on sequential basis at 3.3% in Q3FY2019. The loan growth of the bank was way ahead of the industry level at 42% at end December 2018.

The Current Account-Saving Account (CASA) deposits ratio of the bank has declined to 33.3% at end December 2018 from 33.8% a quarter ago and 38.0% a year ago. The overall retail liabilities of the bank stood at 57.5% at end December 2018 from 57.2% at end September 2018 and 60.9% a year ago.

The bank has an exposure of Rs 2530 crore a borrower from infrastructure development and financial sector through its subsidiaries & SPV (Nil to the Parent/ NBFC/ Financial Service entity) end December 2018, of which Rs 1913 crore is classified as NPAs reducing concerns for NPA recognition.

Asset quality weakens: Bank has witnessed rise in GNPA and NNPA ratios on account of surge in fresh slippages of loans in Q3FY2019.

• GNPA ratio increased 50 bps qoq to 2.10%, while NNPA ratio inched up 34 bps qoq to 1.18% at end December 2018.
• Fresh slippages of advances stood at Rs 2297 crore, while bank has recorded recoveries and upgradations of Rs 935 crore and conducted write-offs of Rs 69 crore in Q3FY2019.
• Restructured assets book was flat on sequential basis at Rs 210.10 crore (0.09% of the advances) at end December 2018, while jumped from Rs 90.30 crore (0.05%) a year ago.
• The securities receipts on the banks book eased to 0.71% at end December 2018.
• The bank has maintained monthly average Liquidity Coverage ratio of 102.3%.

Business growth remains stronger: The business of the bank increased 36% to Rs 466644 crore at end December 2018. Deposits increased 30% to Rs 222758 crore, while advances surged 42% to Rs 243885 crore at end December 2018. Credit-deposit ratio of the bank improved to 109.5% at end December 2018 from 107.5% a quarter ago and 99.9% a year ago.

Stable loan mix: Corporate loan accounted for 67.8% of the advances portfolio, while retail loans (including MSME, business and consumer banking) accounted for 32.2% at end December 2018 compared with 67.7 : 32.3 at end December 2017.

CASA deposit ratio declines: The CASA deposits of the bank increased 14% to Rs 74117 crore at end December 2018. CASA ratio further declined to 33.3% at end December 2018 up from 33.8% a quarter ago and 38.0% a year ago. Retail Banking Liabilities (CASA + Retail banking term deposits) stood at 57.5% of Total Deposits at end December 2018 showing increase from 57.2% a quarter ago and 60.9% a year ago.

Stable margins: Bank has maintained the net interest margin (NIM) steady at 3.3% in Q3FY2019 from previous quarter, while declined from 3.5% in the corresponding quarter last year. Yield on advances rose 40 bps yoy 10.2%, while cost of funds jumped 50 bps yoy to 6.5% in Q3FY2019.

Network expansion: Bank has added 5 new branches during the quarter taking the total branch count to 1115 branches at end December 2018. ATMs count of the bank declined to 1714 ATMs at end December 2018 from 1781 ATMs at end September 2018.

Total headcount of the bank increased to 21182 employees at end December 2018 from 21024 a quarter ago and 19276 at end December 2017.

Book value per share has improved to Rs 122.5 per share at end December 2018 against Rs 118.4 per share a quarter ago. Adjusted Book Value (adjusting for NNPA and 10% of restructured assets) stood at Rs 110.0 per share against Rs 109.5 per share a quarter ago.

Strong NII growth on robust loan growth: For the quarter ended December 2018, the bank has reported 41% surge in NII at Rs 2666.41 crore. NIM was stable on sequential basis at 3.3% in Q3FY2019 supporting the NII growth for Q3FY2019. Bank has also showed strong advances growth of 42% and credit deposit ratio of 109.5% at end December 2018. The interest income increased 57% to Rs 7958.94 crore, while interest expenses moved up 66% to Rs 5292.53 crore.

Non-interest income dips: The non-interest income of the bank plunged 37% on yoy basis to Rs 890.87 crore in Q3FY2019. Corporate trade & cash management increased 46% yoy to Rs 224.1 crore, while the retail banking fees jumped 22% to Rs 352.6 crore in Q3FY2019. However, the forex, debt capital markets & securities segment posted net loss of Rs 160.2 crore, while the corporate banking fees (financial advisory fees) dipped 35% to Rs 472.2 crore.

Net total income of the bank rose 7% to Rs 3557.28 crore in Q3FY2019.

Expense ratio rises: The operating expenses of bank have increased 20% to Rs 1566.92 crore driven by 21% rise in other operating expenses to Rs 941.56 crore in quarter ended December 2018. The employee cost increased 17% to Rs 625.36 crore. The expense ratio jumped 487 bps qoq and 451 bps yoy to 44.0% in Q3FY2019.

The operating profit of the bank declined 1% to Rs 1990.36 crore in quarter ended December 2018.

Provisions rises: Provisions and contingencies increased 31% to Rs 550.23 crore for Q3FY2019. The bank has made Rs 507.5 crore provisions towards NPA provisions including Rs 478.3 crore for a stressed Infrastructure Conglomerate (25% provisioning), while additional standard asset provision were Rs 99.2 crore including Rs 92.5 crore (15%) of accelerated provision for the Infrastructure Conglomerate on exposure which is presently Standard. The bank has made incremental provisions of Rs 184.6 crore on existing Security Receipts / NPIs. However, the bank has written back Rs 205.8 crore investment provisioning and Rs 35.1 crore of other provisions.

Profit before tax declined 9% to Rs 1440.13 crore in Q3FY2019. The effective tax rate declined by 143 bps yoy to 30.4%. Net Profit declined 7% to Rs 1001.85 crore in quarter ended December 2018.

YTD Financial Performance:

For the nine-months ended December 2018 (9MFY2019), the bank has posted healthy 6% increase in net profit to Rs 3226.91 crore. The net interest income improved 31% to Rs 7303.10 crore, while non-interest income advanced 7% to Rs 4058.46 crore in 9MFY2019. The expense ratio improved 15 bps to 40.0% in 9MFY2019 compared to 40.2% in 9MFY2018. The operating expenses increased 21% to Rs 4550.05 crore, while provision and contingencies jumped 83% to Rs 2115.86 crore. The profit before tax improved 5% to Rs 4695.65 crore in 9MFY2019. An effective tax rate has declined to 31.3% in 9MFY2019 from 31.7% in 9MFY2018. The net profit increased 6% to Rs 3226.91 crore in 9MFY2019.