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City Union Bank has reported 15% growth in net profit at Rs 193.53 crore for the quarter ended September 2019. The Net Interest Income (NII) of the bank grew at slow pace of 3%, while the non-interest income surged 64% in Q2FY2020. The core fee income of the bank improved 10% and trading income jumped nearly four times in Q2FY2020.
The business of the bank increased at steady pace of 15% with 17% surge in deposits, while loan book of the bank moved up 12% end September 2019 over September 2018. The asset quality of the bank was stable in Q2FY2020. The CASA ratio of the bank improved on sequential basis 24.7% at end September 2019
The Net Interest Margin (NIM) of the bank eased to 3.91% in Q2FY2020 compared to 4.11% in the previous quarter and 4.32% in the corresponding quarter of previous year.
Asset Quality: The bank has maintained stable quality in Q2FY2020.
- The fresh slippages of loans were steady at Rs 200 crore in Q2FY2020, while the recovery, upgradations and write-off together were at Rs 141.2 crore.
- The restructured advances book increased to Rs 117.7 crore at end September 2019.
- The provision coverage ratio for NPAs was steady at 65% end September 2019.
| Asset Quality Indicators: City Union Bank |
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201909 |
201906 |
201903 |
201812 |
201809 |
Variation |
| QoQ |
YTD |
YoY |
| Gross NPA (Rs Crore) |
1135.44 |
1076.22 |
977.05 |
891.92 |
847.88 |
6 |
16 |
34 |
| Net NPA (Rs Crore) |
624.08 |
599.96 |
591.46 |
527.60 |
497.78 |
4 |
6 |
25 |
| % Gross NPA |
3.41 |
3.34 |
2.95 |
2.91 |
2.85 |
7 |
46 |
56 |
| % Net NPA |
1.90 |
1.89 |
1.81 |
1.74 |
1.69 |
1 |
9 |
21 |
| % Provision Coverage Ratio |
65.00 |
65.00 |
63.00 |
65.00 |
65.00 |
0 |
200 |
0 |
| % CRAR - Basel III |
15.49 |
15.68 |
15.55 |
14.79 |
15.11 |
-19 |
-6 |
38 |
| 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 73730.6 crore end September 2019, driven by 17% increase in deposits to Rs 40451.3 crore. advances moved up 12% to Rs 33279.3 crore at end September 2019.
CASA deposits ratio rises: The CASA deposits of the bank jumped 22% YoY to Rs 9988.2 crore at end September 2019. The CASA ratio increased to 24.7% end September 2019 from 23.4% at end June 2019.
Loan growth eases: Advances growth of the bank has slowed down to 12% at Rs 33279.3 crore end September 2019. The share of secured loans increased to 99.2% at end September 2019.
Investment book of the bank expanded 21% YoY to Rs 9923 crore at end September 2019. The AFS book jumped to Rs 2835.6 crore, while HTM book rose to Rs 7087.4 crore at end September 2019. The AFS book duration stood at 0.85 years with the overall investment portfolio duration at 3.41 years at end September 2019.
Margins decline: The Cost of Deposits for Q2FY20 increased by 18 bps to 6.25% from 6.07% compared with Q2FY19. The yield on advances for Q2FY20 stand decreased to 10.76% as compared to 10.86% in Q2FY19 on account of competition in the market. The Net Interest Margin for Q2FY20 has declined to 3.91% from 4.32% in Q2FY19 due to reduction in CD ratio from 86% to 82%. NIM for H1FY20 was at 4.01% against 4.28% in the corresponding period last year.
Branch expansion: The bank has network of 650 branches and 1724 ATM's with employee base at 5588 employees end September 2019.
Book value of the bank stood at Rs 70.5 per share at end September 2019, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 61.8 per share at end September 2019.
Quarterly Performance
NII growth slows as NIM eases: Bank has recorded 12% increase in the interest earned at Rs 1036.82 crore, while interest expenses jumped 18% to Rs 625.28 crore in Q2FY2020. NII rose 3% to Rs 411.55 crore in the quarter ended September 2019.
Core fee income growth moderates: Bank has posted strong 10% growth in core fee income to Rs 75.9 crore, while the recoveries and other income jumped 41% to Rs 40.2 crore. Further, the treasury income surged 270% to Rs 78.9 crore, leading to 64% surge in the overall non-interest income to Rs 197.97 crore in the quarter ended September 2019.
Stable expenses ratio: The operating expenses of the bank increased 18% to Rs 260.04 crore, as other expenses moved up 15% to Rs 146.95 crore, while employee expenses also increased 22% to Rs 113.09 crore in Q2FY2020. Cost to income ratio rose marginally to 42.9% in Q2FY2020 compared with 42.7% in Q2FY2019, allowing the Operating Profit to increase 17% to Rs 346.48 crore.
Provisions and contingencies jumps: The bank has showed 59% jump in provisions to Rs 115.75 crore. The NPA provisions surged to Rs 98 crore in Q2FY2020 from Rs 47 crore in Q2FY2019. The standard assets provisions also moved up to Rs 9.8 crore from Rs 2.7 crore, while investment provisions were nil in Q2FY2020.
Effective tax rate declined to 18.9% in Q2FY2020 from 26.3% in Q2FY2019. Net Profit improved by 15% YoY to Rs 193.53 crore during quarter ended September 2019.
Financial Performance H1FY2020
Bank has posted 15% increase in net profit to Rs 682.85 crore in the half year ended September 2019. The net interest income increased 7% to Rs 828.43 crore, while non-interest income moved up 45% to Rs 358.27 crore. The net total income gained 16% to Rs 1186.69 crore in H1FY2020. The cost-to-income ratio eased to 41.2% in H1FY2020 compared to 41.7% in H1FY2019. The operating expenses increased 15% to Rs 885.89 crore, while provision and contingencies jumped 54% to Rs 223.70 crore, allowing profit before tax to increase 5% to Rs 474.18 crore in H1FY2020. An effective tax rate dipped to 20.0% in H1FY2020 compared to 26.7% in H1FY2019. The net profit has increased 15% to Rs 379.18 crore in H1FY2020.
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