Net Interest Margin (NIM) of the bank has declined to 2.8% in Q1FY2020 compared with 3.3% in the corresponding quarter last year. The loan growth of the bank has moderated significantly to below the industry level credit growth at 10% at end June 2019.

Bank has also exhibited decline in Current Account-Saving Account (CASA) deposits ratio to 30.2% at end June 2019 from 33.1% a quarter ago and 35.1% a year ago. However, the overall retail liabilities of the bank has remained stable at 58.4% at end June 2019 from 58.8% a quarter ago.

Asset quality deteriorates: Bank has witnessed further deterioration in asset quality with surge in fresh slippages of loans, while banks restructured advances and securities receipts book was flat in Q1FY2020.

• GNPA ratio increased 179 bps qoq to 5.01%, while NNPA ratio inched up 105 bps qoq to 2.91% at end June 2019.
• Fresh slippages of advances stood at Rs 6232 crore, while bank has recorded recoveries and upgradations of Rs 1678 crore and conducted write-offs of Rs 340 crore in Q1FY2020.
• Restructured assets book was flat on sequential basis at Rs 202 crore (0.08% of the advances) at end June 2019, while declined from Rs 249.40 crore (0.12%) a year ago.
• The securities receipt on the banks book was steady at 0.71% at end June 2019.
• The bank has sold one NPA account with the exposure of Rs 411 crore to ARC during the quarter.
• The bank has maintained monthly average Liquidity Coverage ratio of 117.3%.

Business growth eases: The business of the bank increased at slower pace of 8% to Rs 462202 crore at end June 2019. Deposits increased 6% to Rs 225902 crore, while advances moved up 10% to Rs 236300 crore at end June 2019. Credit-deposit ratio of the bank improved to 104.6% at end June 2019 from 100.6% a year ago, while decline from 106.1% a quarter ago.

Retail loans gain share: Corporate loan accounted for 63.9% of the advances portfolio, while retail loans (including MSME, business and consumer banking) accounted for 36.1% at end June 2019 compared with 67.6 : 32.4 at end June 2018.

CASA ratio declines, stable retail liabilities: The CASA deposits declined 9% to Rs 68135 crore at end June 2019. CASA ratio dipped to 30.2% at end June 2019 up from 33.1% a quarter ago and 35.1% a year ago.

Retail Banking Liabilities (CASA + Retail banking term deposits) stood at 58.4% of Total Deposits at end June 2019 showing increase from 56.7% a year ago, while remained flat from 58.8% a quarter ago.

Margin declines: Bank has exhibited decline in the net interest margin (NIM) to 2.8% in Q1FY2020 from 3.1% in previous quarter and 3.3% in the corresponding quarter last year. The decline in CASA deposits ratio and higher NPAs impacted the NIMs of the bank. The yield on advances was flat on yoy basis at 10.0%, while cost of funds jumped 50 bps yoy to 6.8% in Q1FY2020.

Network expansion: Bank has added 2 new branches during the quarter taking the total branch count to 1122 branches at end June 2019. ATMs count of the bank dipped to 1220 ATMs at end June 2019 from 1456 ATMs a quarter ago.

Total headcount of the bank increased to 21745 employees at end June 2019 from 21136 a quarter ago and 19597 at end June 2018.

Book value per share stood at Rs 116.5 per share, while adjusted Book Value (adjusting for NNPA and 10% of restructured assets) stood at Rs 86.7 per share end June 2019.

NII growth slumps on decline in margins and moderation in loan growth: For the quarter ended June 2019, the bank has reported moderate 3% growth in NII at Rs 2280.84 crore, as NIM improved dipped to 2.8% in Q1FY2020 from 3.3% in Q1FY2019. Bank has also showed sharp deceleration in advances growth to 10% end June 2019. The interest income increased 19% to Rs 7816.14 crore, while interest expenses moved up 27% to Rs 5535.30 crore.

Non-interest income declines: The non-interest income of the bank declined 25% on yoy basis to Rs 1272.66 crore in Q1FY2020. Corporate Trade & Cash Management income declined 8% yoy to Rs 199.5 crore, while the corporate banking fees (financial advisory fees) dipped 91% to Rs 61 crore. The Retail Banking Fees rose 4% to Rs 347.4 crore. Forex, Debt Capital Markets & Securities income advanced 43% to Rs 656.1 crore in Q1FY2020.

Net total income of the bank declined 9% to Rs 3553.50 crore in Q1FY2020.

Expense ratio rises: The operating expenses of bank have increased 9% to Rs 1594.40 crore driven by 7% rise in other operating expenses to Rs 932.92 crore in quarter ended June 2019. The employee cost increased 12% to Rs 661.48 crore.

The expense ratio jumped 760 bps yoy to 44.9% in Q1FY2020, but eased 1156 bps over a quarter ago.

The operating profit of the bank declined 20% to Rs 1959.10 crore in quarter ended June 2019.

Provisions jump: Provisions and contingencies jumped 185% to Rs 1784.11 crore for Q1FY2020, which includes one off impact of Rs 1109 crore of Investment MTM Provision led by rating downgrades of investments in Companies of 2 financial services groups.

Profit before tax dipped 90% to Rs 174.99 crore in Q1FY2020.

The effective tax rate moved up by 390 bps yoy to 35.0%. Net Profit declined 91% to Rs 113.76 crore in quarter ended June 2019.

Annual Financial Performance:

For the year ended March 2019 (FY2019), the bank has posted 59% dip in net profit to Rs 1720.27 crore. The net interest income improved 27% to Rs 9809.03 crore, while non-interest income declined 12% to Rs 4590.15 crore in FY2019. The expense ratio increased 329 bps yoy to 43.5% in FY2019 compared to 40.2% in FY2018. The operating expenses increased 20% to Rs 6264.28 crore, while provision and contingencies jumped 272% to Rs 5777.56 crore. The profit before tax plunged 62% to Rs 2357.34 crore in FY2019. An effective tax rate has declined to 27.0% in FY2019 from 31.8% in FY2018. The net profit declined 59% to Rs 1720.27 crore in FY2019.