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City Union Bank has reported 15% growth in net profit at Rs 185.65 crore for the quarter ended June 2019. The bank has posted 11% growth in net interest income (NII), while the core fee income of the bank improved 5% in Q1FY2020. The Net Interest Margin (NIM) of the bank eased to 4.11% in Q1FY2020 compared to 4.24% in the corresponding quarter of previous year.
On business front, the bank as has posted 15% growth in business with strong 14% surge in loan book. The asset quality of the bank was stable in Q1FY2020. Bank has witnessed decline in the credit to deposit ratio to 82.5% at end June 2019 from 84.0% at end June 2018. The CASA ratio of the bank was nearly stable at 23.4% at end June 2019 from 23.9% at end June 2018.
Asset Quality: The bank has witnessed marginally deterioration in asset quality in Q1FY2020.
- The fresh slippages of loans stood at Rs 199.9 crore in Q1FY2020, while the recovery, upgradations and write-off together were higher at Rs 100.8 crore.
- The restructured advances book stood at Rs 63.83 crore at end June 2019.
- The stressed assets (NNPA and Standard restructured asset) of the bank stood at 2.06% of advances at end June 2019 from 1.71% end June 2018.
| Asset Quality Indicators: City Union Bank |
|
201906 |
201903 |
201812 |
201809 |
201806 |
Variation |
| QoQ |
YoY |
| Gross NPA (Rs Crore) |
1076.22 |
977.05 |
891.92 |
847.88 |
851.12 |
10 |
26 |
| Net NPA (Rs Crore) |
599.96 |
591.46 |
527.60 |
497.78 |
473.49 |
1 |
27 |
| % Gross NPA |
3.34 |
2.95 |
2.91 |
2.85 |
3.02 |
39 |
32 |
| % Net NPA |
1.89 |
1.81 |
1.74 |
1.69 |
1.70 |
8 |
19 |
| % Provision Coverage Ratio |
65.00 |
63.00 |
65.00 |
65.00 |
65.00 |
200 |
0 |
| % CRAR - Basel III |
15.68 |
15.55 |
14.79 |
15.11 |
16.06 |
13 |
-38 |
| Tier I - Basel III % |
15.68 |
15.03 |
14.39 |
14.71 |
15.64 |
65 |
4 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Stable business growth: The business of the bank has increased 15% YoY to Rs 71306 crore end June 2019, driven by 14% increase in advances to Rs 32230 crore. Deposits moved up 16% to Rs 39077 crore at end June 2019.
CASA deposits ratio stable: The CASA deposits of the bank increased 14% YoY to Rs 9161 crore at end June 2019. The CASA ratio was nearly stable at 23.4% at end June 2019 compared to 23.9% at end June 2018.
Loan growth eases: Advances growth was driven by retail loans rising 8% YoY to Rs 3630 crore at end June 2019, while credit to large industries increased 13% to Rs 2154 crore and wholesale traders 15% to Rs 4372 crore and MSME 12% to Rs 10688 crore at end June 2019. The credit to agriculture moved up 14% YoY to Rs 4759 crore at end June 2019.
The share of secured loans increased to 99.3% at end June 2019 from 98.8% at end June 2018. The share of retail, agriculture and MSME loans eased to 59.2% at end June 2019 from 60.7% a year ago.
Investment book of the bank expanded 5% YoY to Rs 8626.3 crore at end June 2019. The AFS book was flat at Rs 2099 crore, while HTM book rose 7% to Rs 6528 crore at end June 2019. The AFS book duration stood at 0.85 years with the overall investment portfolio duration at 3.63 years at end June 2019.
Margins decline: The bank has showed 16 bps YoY increase in cost of funds to 5.37%, while yield on funds rose only 2 bps YoY to 9.02% in Q1FY2020. Thus, the NIM has declined 13 bps YoY to 4.11%.
Branch expansion: The bank has network of 650 branches and 1711 ATM's with employee base at 5527 employees end June 2019.
Book value of the bank stood at Rs 68.4 per share at end June 2019, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 60.2 per share at end June 2019.
Quarterly Performance
NII growth slows as NIM eases: Bank has recorded 16% increase in the interest earned at Rs 1029.24 crore, while interest expenses jumped 19% to Rs 612.36 crore in Q1FY2020. NII rose 11% to Rs 416.88 crore in the quarter ended June 2019.
Core fee income growth moderates: Bank has posted strong 5% growth in core fee income to Rs 80 crore, while the recoveries and other income jumped 15% to Rs 39 crore. Further, the treasury income surged 131% to Rs 45 crore, leading to 26% surge in the overall non-interest income to Rs 163.29 crore in the quarter ended June 2019.
Stable expenses improves: The operating expenses of the bank increased 12% to Rs 228.78 crore, as other expenses moved up 10% to Rs 128.41 crore, while employee expenses increased 15% to Rs 100.37 crore in Q1FY2020. Cost to income ratio improved to 39.4% in Q1FY2020 compared with 40.6% in Q1FY2019, helping the Operating Profit to increase 17% to Rs 351.39 crore.
Provisions and contingencies jumps: The bank has showed 49% jump in provisions to Rs 115.75 crore. The NPA provisions surged to Rs 144 crore in Q1FY2020 from Rs 65 crore in Q1FY2019. However, the bank has written back investment provisions of Rs 24 crore, standard assets provisions of Rs 3.7 crore and other provisions of Rs 0.5 crore in Q1FY2020.
Effective tax rate declined to 21.2% in Q1FY2020 from 27.1% in Q1FY2019. Net Profit improved by 15% YoY to Rs 185.65 crore during quarter ended June 2019.
Annual Financial Performance:
Bank has posted 15% increase in net profit to Rs 682.85 crore in the year ended March 2019. The net interest income increased 13% to Rs 1611.49 crore, while non-interest income declined 3% to Rs 514.39 crore. The net total income moved up 8% to Rs 2125.88 crore in FY2019. The cost-to-income ratio increased to 41.7% in FY2019 compared to 38.5% in FY2018. The operating expenses increased 17% to Rs 885.89 crore, while provision and contingencies declined 25% to Rs 315.14 crore, allowing profit before tax to increase 17% to Rs 924.85 crore in FY2019. An effective tax rate rose to 26.2% in FY2019 compared to 25.1% in FY2018. The net profit has increased 15% to Rs 682.85 crore in FY2019.
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