R o b u s t a l l - r o u n d p e r f o r m a n c e …
Margin expansion to 3.07% from 2.87% QoQ along with stable asset
quality at 0.47% NNPA remain the highlight of the quarter. Total deposits
grew 22.1% while advances grew 23.9% boosted by NII growth of 26%
YoY to | 2567 crore ahead of our estimates. Net profit surged 14.4% YoY
in line with expectation to | 1167 crore. We maintain our estimate of 18%
CAGR in PAT over FY11-13E to | 5925 crore.
ƒ International book grows at a faster pace, domestic NIM up 28 bps…
The bank reported a 36.8% increase in the international loan book
and 19.3% growth in the domestic book. Global NIM stood at 3.07%
but domestic NIM increased by 28 bps to 3.67% from 3.39%
sequentially. Domestic yields spiked sharply by 91 bps in a quarter
to 12.14% whereas cost of deposits rose only 41 bps to 6.82%
boosting NIMs.
Non-interest income grew at 7.8% YoY to | 734 crore. Core fee
income (CEB) grew 26% YoY to | 313.7 crore in correlation with
strong credit growth. Also, the international business contributed
36% to core fee income.
Strong liability franchise has helped maintain CASA at 34.2%
ƒ Stability of asset quality in tough times…
GNPA (| 3402 crore) remained flat QoQ in absolute terms and came
down to 1.41% whereas NNPA (| 1118.6 crore) rose marginally to
0.47%. Restructured assets increased to | 7829 crore from | 7167
crore, an increase of | 662 crore in Q2FY12. These assets comprise
58% wholesale banking, 23% SME, 11.4% agriculture and 7.5%
retail. Of the total amount, | 959 crore has slipped into NPA. We
expect GNPA & NNPA to reach 1.6% & 0.5%, respectively, in FY13E.
V a l u a t i o n
We remain positive on the stock as the management has consistently
delivered both on profitability and asset quality guidance. We expect
business to grow at 20% CAGR over FY11-13E and RoE and RoA to stay
above 20% and 1.2%, respectively. We, therefore, maintain the premium
multiple of 1.4x FY13E BV for the bank and target price of | 954.
Margin expansion to 3.07% from 2.87% QoQ along with stable asset
quality at 0.47% NNPA remain the highlight of the quarter. Total deposits
grew 22.1% while advances grew 23.9% boosted by NII growth of 26%
YoY to | 2567 crore ahead of our estimates. Net profit surged 14.4% YoY
in line with expectation to | 1167 crore. We maintain our estimate of 18%
CAGR in PAT over FY11-13E to | 5925 crore.
ƒ International book grows at a faster pace, domestic NIM up 28 bps…
The bank reported a 36.8% increase in the international loan book
and 19.3% growth in the domestic book. Global NIM stood at 3.07%
but domestic NIM increased by 28 bps to 3.67% from 3.39%
sequentially. Domestic yields spiked sharply by 91 bps in a quarter
to 12.14% whereas cost of deposits rose only 41 bps to 6.82%
boosting NIMs.
Non-interest income grew at 7.8% YoY to | 734 crore. Core fee
income (CEB) grew 26% YoY to | 313.7 crore in correlation with
strong credit growth. Also, the international business contributed
36% to core fee income.
Strong liability franchise has helped maintain CASA at 34.2%
ƒ Stability of asset quality in tough times…
GNPA (| 3402 crore) remained flat QoQ in absolute terms and came
down to 1.41% whereas NNPA (| 1118.6 crore) rose marginally to
0.47%. Restructured assets increased to | 7829 crore from | 7167
crore, an increase of | 662 crore in Q2FY12. These assets comprise
58% wholesale banking, 23% SME, 11.4% agriculture and 7.5%
retail. Of the total amount, | 959 crore has slipped into NPA. We
expect GNPA & NNPA to reach 1.6% & 0.5%, respectively, in FY13E.
V a l u a t i o n
We remain positive on the stock as the management has consistently
delivered both on profitability and asset quality guidance. We expect
business to grow at 20% CAGR over FY11-13E and RoE and RoA to stay
above 20% and 1.2%, respectively. We, therefore, maintain the premium
multiple of 1.4x FY13E BV for the bank and target price of | 954.
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