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City Union Bank has reported 19% decline in net profit at Rs 157.67 crore for the quarter ended September 2020. The bank has posted healthy 15% growth in net interest income (NII). The Net Interest Margin (NIM) of the bank improved to 4.12% in Q2FY2021 compared to 3.91% in the corresponding quarter of previous year. However, the core fee income of the bank declined 14% in Q2FY2021.
On business front, the bank as has posted 4% growth in business with strong 6% increase in loan book. The asset quality of the bank was stable in Q2FY2021. Bank has substantially improved the credit to deposit ratio to 85.6% at end September 2020 from 82.3% at end September 2019. Further, the CASA ratio of the bank has moved up to 25.7% at end September 2020 from 24.7% at end September 2019.
Asset Quality: The bank has improved asset quality in Q2FY2021.
The fresh slippages of loans stood at Rs 0 crore in Q2FY2021, while the recovery, upgradations and write-off together were higher at Rs 125.5 crore.
The restructured advances book increased to Rs 478 crore at end September 2020. The fresh restructuring of loans was at Rs 79.4 crore in Q2FY2021.
The stressed assets (NNPA and Standard restructured asset) of the bank rose to 3.13% of advances at end September 2020 from 2.23% end September 2019.
| Asset Quality Indicators: City Union Bank |
|
Sep-20 |
Jun-20 |
Mar-20 |
Dec-19 |
Sep-19 |
Variation |
| QoQ |
YTD |
YoY |
| Gross NPA (Rs Crore) |
1220.58 |
1346.09 |
1413.40 |
1185.43 |
1135.44 |
-9 |
-14 |
7 |
| Net NPA (Rs Crore) |
631.44 |
716.35 |
778.49 |
649.41 |
624.08 |
-12 |
-19 |
1 |
| % Gross NPA |
3.44 |
3.90 |
4.09 |
3.50 |
3.41 |
-46 |
-65 |
3 |
| % Net NPA |
1.81 |
2.11 |
2.29 |
1.95 |
1.90 |
-30 |
-48 |
-9 |
| % Provision Coverage Ratio |
70.00 |
68.00 |
65.00 |
65.46 |
65.00 |
200 |
500 |
500 |
| % CRAR - Basel III |
17.36 |
16.77 |
16.76 |
15.41 |
15.49 |
59 |
60 |
187 |
| Tier I - Basel III % |
16.29 |
15.80 |
15.80 |
14.86 |
14.96 |
49 |
49 |
133 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Business growth eases: The business of the bank rose at slower pace of 4% YoY to Rs 76857 crore end September 2020, driven by 6% rise in advances to Rs 35437 crore. Deposits rose mere 2% to Rs 41421 crore at end September 2020.
CASA deposits ratio improves: The CASA deposits of the bank increased 7% YoY to Rs 10645 crore at end September 2020. The CASA ratio moved up to 25.7% at end September 2020 compared to 24.7% at end September 2019.
Retail loans drives up loan growth: Advances growth was driven by retail loans rising 46% YoY to Rs 5391 crore at end September 2020, while credit to wholesale traders rose 1% to Rs 4610 crore and MSME 11% to Rs 12300 crore at end September 2020. The credit to agriculture declined 14% YoY to Rs 4006 crore and large industries also declined 6% to Rs 2053 crore and at end September 2020.
The share of secured loans eased marginally to 98.9% at end September 2020 from 99.2% at end September 2019. The share of retail, agriculture and MSME loans increased to 61.2% at end September 2020 from 58.5% a year ago.
Investment book of the bank increased 9% YoY to Rs 10841.9 crore at end September 2020. The AFS book dipped 18% to Rs 2318 crore, while HTM book surged 20% to Rs 8524 crore at end September 2020. The AFS book duration stood at 1.33 years with the overall investment portfolio duration at 4.33 years at end September 2020.
Margins improve: The bank has showed sharp 67 bps YoY decline in cost of funds to 4.56% , while yield on fund decline only 42 bps YoY to 8.26% in Q2FY2021. Thus, the NIM has improved 21 bps YoY to 4.12%.
Branch expansion: The bank has network of 700 branches and 1780 ATM's manned by 5769 employees end September 2020.
Book value of the bank stood at Rs 75.5 per share at end September 2020, while the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 66.3 per share at end September 2020.
Quarterly Performance
NII rises as NIM improves: Bank has recorded 2% increase in the interest earned at Rs 1060.95 crore, while interest expenses declined 6% to Rs 585.82 crore in Q2FY2021. NII improved 15% to Rs 475.13 crore in the quarter ended September 2020.
Core fee income declines: Bank has posted 14% decline in core fee income to Rs 65 crore, while the recoveries and other income fell 11% to Rs 36 crore. Further, the treasury income also declined 13% to Rs 69 crore, causing 13% dip in the overall non-interest income to Rs 169.32 crore in the quarter ended September 2020.
Expenses ratio improves: The operating expenses of the bank were flat at Rs 259.79 crore, as other expenses declined 5% to Rs 139.92 crore, while employee expenses rose 6% to Rs 119.87 crore in Q2FY2021. Cost to income ratio declined to 40.3% in Q2FY2021 compared with 42.9% in Q2FY2020, helping the Operating Profit to increase 11% to Rs 384.66 crore.
Provisions and contingencies jumps: The bank has showed 64% surge in provisions to Rs 177.00 crore.
Effective tax rate moved up to 24.1% in Q2FY2021 from 18.9% in Q2FY2020. Net Profit declined by 19% YoY to Rs 157.67 crore during quarter ended September 2020.
Financial Performance H1FY2021:
Bank has posted 18% decline in net profit to Rs 311.70 crore in the year ended September 2020. The net interest income increased 10% to Rs 912.10 crore, while non-interest income declined 8% to Rs 329.91 crore. The net total income moved up 5% to Rs 1242.01 crore in H1FY2021. The cost-to-income ratio improved to 40.4% in H1FY2021 compared to 41.2% in H1FY2020. The operating expenses rose 3% to Rs 501.31 crore, while provision and contingencies surged 49% to Rs 334.00 crore, causing 14% decline in profit before tax to Rs 406.70 crore in H1FY2021. An effective tax rate rose to 23.4% in H1FY2021 compared to 20.0% in H1FY2020. The net profit has declined 18% to Rs 311.70 crore in H1FY2021.
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