The Net Interest Margins (NIMs) bank has improved to 2.72% in Q3FY2020 from 2.69% in Q2FY2020 and 2.66% Q3FY2019, supporting 16% growth in Net Interest Income (NII) of the bank for Q3FY2020.

The advances growth of the bank moderated to 9%, but the bank has exhibited healthy 17% growth in the focused retail, agriculture and MSME loan book. The bank has also improved CASA deposits ratio to 25.2% end December 2019.

Asset quality stable: Asset quality of the bank was stable with the sequential decline in fresh slippages of loans in Q3FY2020.

• GNPA ratio of the bank rose slightly to 4.96%, while NNPA ratio declined to 3.44% end December 2019.
• Fresh slippages of advances were lower at to Rs 361 crore in Q3FY2020. The recoveries and upgradations and write-offs stood at Rs 263 crore in Q3FY2020.
• The standard restructured advances book of the bank increased to Rs 703 crore at end December 2019 from Rs 489 crore end September 2019.
• Provision coverage ratio increased to 50.4% end December 2019.

Business growth slows marginally: Business growth of the bank moderated to 9% yoy at Rs 150208 crore at end December 2019. The moderation in business growth was driven by deceleration in advances growth to 9% yoy at Rs 65334 crore at end December 2019, while the deposits growth also eased to 9% at Rs 84874 crore at end December 2019.

Strong retail, agriculture, MSME loan book growth, corporate loan book declines: Gross advances book increased 9% yoy to Rs 65334 crore at end December 2019. The corporate book declined 7% to Rs 19713 crore, while its share in loan book fell to 30% end December 2019 from 35% end December 2018.

The retail loan book expanded 18% to Rs 19834 crore, agriculture book moved up 21% to Rs 9746 crore and MSME loan book gained 14% to Rs 16041 crore end December 2019.

Within the retail book, the mortgages jumped 35% to Rs 5178 crore at end December 2019. Gold loan book increased 38% to Rs 2544 crore, loan against FDs 27% to Rs 1528 crore and vehicle 17% to Rs 1093 crore at end December 2019.

CASA ratio improves: CASA deposits of the bank increased 13% at Rs 21422 crore gaining the share in overall deposits to 25.29% at end December 2019 compared to 24.9% a quarter ago.

Network expansion: Bank has network of 923 branches and 1401 ATMs at end December 2019.

Book Value per share stood at Rs 29.5 per share at end December 2019, while adjusted Book value (adjusting for NNPA and 10% of restructured advances) was at Rs 16.9 per share at end December 2019.

NII growth improves as NIMs rises: Bank has reported 16% growth in Net Interest Income (NII) at Rs 601.78 crore for the quarter ended December 2019. The interest earned increased 13% to Rs 1967.31 crore, while interest expended moved up 12% to Rs 1365.50 crore in the quarter ended December 2019.

Non-interest income jumps: The non-interest income of the bank increased 18% to Rs 220.42 crore in Q3FY2020, as the treasury income surged 19% to Rs 32 crore and other income moved up 52% to Rs 79 crore in Q3FY2020. Core fee income of the bank was flat at Rs 99 crore, while forex income increased 10% to Rs 11 crore in Q3FY2020.

Net total income increased 16% to Rs 822.20 crore in the quarter ended December 2019.

Expense ratio steady: The operating expenses of the bank increased 17% to Rs 439.06 crore in the quarter ended December 2019. The expense ratio was flat at 53.4% in the quarter ended December 2019. The operating profit increase 15% to Rs 383.14 crore in Q3FY2020.

Provisions up: The provisions and contingencies increased 28% to Rs 260.94 crore in the quarter under review. The provisions for NPA moved up to Rs 203 crore and standard assets Rs 24 crore, while investment provisions stood at Rs 23 crore and other provisions at Rs 12 crore in Q3FY2020.

With the surge in provisions, PBT declined 5% to Rs 122.20 crore in Q3FY2020.

The effective tax rate dipped to 25.9% in Q3FY2020 compared to 34.9% in Q3FY2019. Net Profit increased 8% to Rs 90.54 crore in the quarter ended December 2019.

YTD Financial Performance:

For the nine-months ended December 2019 (9MFY2020), the bank posted 40% surge in the net profit at Rs 248.28 crore. The net interest income increased 13% to Rs 1721.74 crore, while non-interest income moved up 33% to Rs 651.54 crore in 9MFY2020. The operating expenses increased 15% to Rs 1261.06 crore, while provision and contingencies moved up 21% to Rs 772.29 crore in 9MFY2020. The profit before tax jumped 25% to Rs 339.93 crore in 9MFY2020. The expense ratio dipped 154bps to 53.1% in 9MFY2020 compared to 54.7% in 9MFY2019. After considering 27.0% of effective tax rate, the net profit moved up 40% to Rs 248.28 crore in 9MFY2020.

Notes:

The bank has exercised the option to make provisions in respect of 3 NPA account identified as fraud during the quarter over a period of four quarter. Accordingly, the bank has debited Rs 15.23 crore to P&L being 25% of the outstanding net book value of the said advances and the remaining unprovided of Rs 45.67 crore will be debited to profit and loss account in the next three quarters in equal installments.