Axis Bank. Shocker on asset quality. Source: Company Data; PL Research

Transcription

1 Shocker on asset quality October 17, 2017 R Sreesankar rsreesankar@plindia.com / Pritesh Bumb priteshbumb@plindia.com / Vidhi Shah vidhishah@plindia.com / Rating Reduce Price Rs513 Target Price Rs454 Implied Upside 11.5% Sensex 32,609 Nifty 10,234 (Prices as on October 17, 2017) Trading data Market Cap. (Rs bn) 1,229.1 Shares o/s (m) 2, M Avg. Daily value (Rs m) Major shareholders Promoters 30.35% Foreign 49.13% Domestic Inst. 9.62% Public & Other 10.90% Stock Performance (%) 1M 6M 12M Absolute (0.8) 2.1 (1.1) Relative (1.9) (8.7) (19.5) How we differ from Consensus EPS (Rs) PL Cons. % Diff Price Performance (RIC: AXBK.BO, BB: AXSB IN) (Rs) Oct 16 Dec 16 Feb 17 Source: Bloomberg Apr 17 Jun 17 Aug 17 Oct 17 Axis Bank disappointed once again with their 2QFY18 results. it continue to remain bogged down by high slippages of Rs89.36bn (highest so far in any quarter). PAT of Rs4.32bn was weak on all counts but was on the back of heavy provisioning. Half of the slippages were related to divergence from the RBI s Annual Inspection of Accounts for FY17 and were standard in bank s book. Although, Rs24.0bn of these had overlap with bank s watch list & restructured, balance accounts were outside of any watch list which is quite high in our view. Slippage remains from Power/Steel/Engg/Infra segments and bank sees stress to continue for few more quarters. Key positives for the franchise continue to be strong CASA, strong retail book and growing SME, but we reiterate that margin pressure will increase going ahead despite growing loan book, as weaker fees and high provisioning requirement on ageing and NCLT referrals keep any earnings recovery extended. We retain REDUCE with TP of Rs454 (reduced from Rs494) based on Sep 19 ABV (rolled from Mar 19). Weak operational performance: Bank s NII growth was flat despite decent loan book growth of 16% YoY, on lower margins of 18bps QoQ to 3.45% as pressure on asset yields was evident (more from MCLR conversion). Other income was lower along with slower fee income growth of 11 12% and mainly from retail. Bank continued to maintain guidance of NIM compression of ~20bps in FY18 v/s % in FY17, but we believe NIM pressure would be slightly higher than expected. Continued to be bogged down by slippages this time from RBI inspection: Bank witnessed very high slippages of Rs89.4bn of which +50% came from divergence related from RBI s annual inspection where accounts which were standard with bank from Steel/Power/IT (sole lender) and other smaller segments. Excluding divergence related, slippages still remain high (higher than last quarter) and were outside the watch list. Asset quality Challenges to continue: Stressed asset book still remains fairly large with bank acknowledging most slippages in past have been from BB & below related accounts and hence has narrowed Rs158.2bn of standard exposure as BB & below, of which Rs60.5bn is already in watch list and Rs24.1bn in form of various restructuring remaining a risk. Bank has increased its credit cost guidance to bps from bps on divergence related provisioning and enhances PCR to 60 65%. Key financials ( Y/e March) E 2019E Net interest income 168, , , ,127 Growth (%) Operating profit 161, , , ,451 PAT 82,237 36,793 52,206 86,978 EPS (Rs) Growth (%) 11.0 (55.5) Net DPS (Rs) Profitability & Valuation E 2019E NIM (%) RoAE (%) RoAA (%) P / BV (x) P / ABV (x) PE (x) Net dividend yield (%) Source: Company Data; PL Research Q2FY18 Result Update Prabhudas Lilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision. Please refer to important disclosures and disclaimers at the end of the report

2 Exhibit 1: Q2FY18 Financials Slightly weaker operationally; asset quality issues still linger (Rs m) Q2FY18 Q2FY17 YoY gr. (%) Q1FY18 QoQ gr. (%) Interest Income 1,12,351 1,11, ,10, Interest Expenses 66,955 66, , Net interest income (NII) 45,396 45, ,161 (1.7) Other income 3,770 5,360 (29.7) 8,241 (54.3) Total income 25,855 25, ,998 (13.8) Operating expenses 71,252 70, ,160 (6.4) Staff expenses 33,478 29, , Other expenses 10,828 9, ,883 (0.5) Operating profit 22,650 19, , Core operating profit 37,773 41,002 (7.9) 42,912 (12.0) Total provisions 34,003 35,642 (4.6) 34,670 (1.9) Profit before tax 31,404 36,227 (13.3) 23, Tax 6,369 4, ,492 (67.3) Profit after tax 2,045 1, ,436 (68.2) Balance sheet (Rs m) Deposits 41,64,306 38,01, ,37, Advances 41,01,708 35,31, ,54, Ratios (%) Profitability ratios RoaA (60) NIM (19) 3.6 (18) Cost of Funds (50) 5.2 (6) Asset Quality Gross NPL 2,74,023 1,63, ,20, Net NPL 1,40,523 77, , Restructured Assets (Rs m) 40,350 67,020 (39.8) 53,360 (24.4) Gross NPL ratio Net NPL ratio Coverage ratio (Calc) (390) 55.7 (695) Rest. assets/ Total adv (91) 1.4 (40) Business & Other Ratios Low cost deposit mix Cost income ratio (310) Non int. inc / total income Credit deposit ratio (4) CAR (24) Tier I October 17,

3 Key Q2FY18 conference call highlights: Balance sheet growth & outlook: Loan book Advances have grown by 16% YoY as SME book shows better growth and corporate also doing well this quarter while retail continues to grow strong. Retail loan book Book has become more diversified growing at 23.4% YoY led by auto (33% YoY) and personal loans (36% YoY). Bank continues to see strong traction in growth (smaller base) in credit cards, small business banking and education loans segments. Corporate loan book Continue to grow robust at 36& YoY in working capital loans, whereas term loans have grown by 3% YoY. Focus is on moving to deeper corporate bond market, better rated corporate, reduce risk by concentration and improve transaction banking. SME loan book Book has grown at 10% QoQ and 15% YoY led by both working capital and term loans and the growth momentum continues to be the same from here on. Liabilities: Avg. CASA on daily average basis grew better at 24% YoY with CA & SA deposits growing strong at 28.4% and 20.8% YoY respectively. CASA Ratio stands at 50% in Q2FY18. Have brought down wholesale deposits further by 2% YoY in lieu of lesser requirement of capital as they raised Tier I bonds. NIMs: Margins came off by 18bps QoQ to 3.45% mainly on back of sharp decline in yields on advances and also due to interest reversals on NPAs identified in Risk Base Supervision (RBS) in spite of relief coming from cost of funds. Outlook Continue to maintain compression of ~20bps in range of % over the FY from exit of 3.67% in FY17. Fees/Opex: Fee Fees growth was driven by retail which constitutes 48% of fees and grew by 23% YoY and transaction fees which constitutes 26% of fees and grew by 13% YoY. Bancassurance and card fees continue to show strong traction. Corporate fees saw de growth of 8% YoY. Opex Opex has one off item mainly on regulatory related where bonus entitlement was increased for contracted employees. Outlook Maintains opex growth guidance in low to mid teens for FY18 v/s 19% YoY in Q1FY18. October 17,

4 Asset Quality: Stressed asset accretion Bank witnessed Rs89.4bn of slippages of which majority continued to be from corporate book of Rs81.1bn (~91% of slippages) and these major corporate slippages were from outside the watch list (70% of corporate slippages), while saw comparatively lower slippages from watch list i.e. Rs24bn. The slippages that came from outside watch list were on account of RBS wherein RBI recognized 9 A/cs having exposure of Rs48.7bn to be recognized as NPA of which 2 A/cs were servicing interest to the Bank and only Rs2bn was recognized as NPA in Q1FY18. O/s SRs stand at Rs30bn as on Q2FY18. Watch list Details Watch list has come down from 2.1% to 1.5% of loan book. Rs24.3bn slippages were seen from the watch list and the funded watch list currently stand at Rs60.5bn. Power sector still dominates the watch list with 64% share. Non Fund watch list stands at ~Rs11bn. BB & Below book Bank has come out with new definition of stressed assets which includes 100% of watch list and 88% of Restructured Dispensations amounting to Rs158.2bn. Top 5 sectors that constitute this stressed asset book are Power (30%), Infra Construction (11%), Iron and Steel (11%), Road (8%) and Mining (5%). Slippages continue from non overlap book with watch list and restructured and the same continue going ahead. Credit Cost Bank has done provisioning of Rs16.18bn on the RBS recognized 9 A/cs and additional Rs5.05bn on IBC accounts taking PCR on IBC accounts to 55%. Bank has also used floating provisions of Rs2.6 bn in this quarter. Bank also expects the LGD to remain elevated in this cycle and could be around 65%. Outlook & guidance Bank expects lumpy slippages from power sector for latter part of FY18 and also other major sectors constituting BB and below. Bank believes stress formation to increase from RBS recognized accounts and further provisions required on IBC A/cs and thus revises credit cost guidance from bps to bps for FY18. We maintain REDUCE with a TP of Rs454. Exhibit 2: Growth is led by retail mainly from Auto, home and unsecured segments and SME; while corporate book growth also picked up with demand in working capital (Rs m) Q2FY18 Q2FY17 YoY gr. (%) Q1FY18 QoQ gr. (%) Large & mid corporate 17,31,970 15,80, ,22, SME Advances 5,27,180 4,58, ,79, Retail 18,42,560 14,92, ,52, Housing Loans & LAP 7,92,301 6,71, ,71, Personal loans 1,65,830 1,79,141 (7.4) 1,57, Auto loans 1,84,256 1,34, ,75, October 17,

5 Exhibit 1: Margins saw pressure on back of sharp decline in yields and interest reversals on slippages 4.1% 4.0% 3.9% 3.8% 3.7% 3.6% 3.5% 3.4% 3.3% NIM (%) 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 ibit 2: 52% 50% 48% 46% 44% 42% 40% CASA ratio improved on strong growth from both CA & SA Low Cost deposits(%) 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Exhibit 3: MCLR linked loans has made big shift from base rate partly impacting yields Base Rate MCLR Fixed LIBOR 14% 14% 15% 16% 14% 14% 14% 17% 17% 17% 16% 15% 16% 17% 4% 11% 18% 29% 36% 40% 69% 65% 57% 50% 42% 34% 29% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Exhibit 4: Retail fees dominate and continues to see strong growth mainly led by TPP and card related fees Retail (non card) Retail (card) Transc. Bnking SME Treasry & DCM Corp Fees 25% 26% 25% 25% 20% 24% 18% 21% 1% 4% 2% 1% 5% 2% 4% 1% 4% 10% 10% 5% 4% 5% 6% 6% 27% 26% 29% 26% 26% 22% 20% 16% 14% 13% 16% 15% 17% 16% 19% 18% 26% 29% 26% 28% 28% 30% 29% 30% 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 October 17,

6 Exhibit 5: C/I ratio spiked up on lower total income whereas opex was stable 48% 46% 44% 42% 40% 38% 36% 34% cost income 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Exhibit 6: Asset quality deteriorated on high corporate slippages from outside watchlist Gross NPA (%) Net NPA (%) Coverage Ratio (%) RHS 6% 5% 4% 3% 2% 1% 0% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 80% 70% 60% 50% 40% 30% 20% 10% 0% Exhibit 7: Incremental loans going towards better rated corporate AAA/AA/A BBB <BBB or unrated 7% 7% 9% 8% 9% 9% 9% 11% 11% 11% 12% 16% 15% 14% 12% 10% 11% 32% 31% 30% 31% 30% 31% 29% 29% 28% 27% 26% 20% 22% 23% 22% 22% 19% 62% 62% 61% 61% 61% 60% 62% 60% 61% 62% 62% 64% 63% 63% 66% 68% 70% 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 October 17,

7 Exhibit 8: SME profile dominated towards better rated SME 1 3 SME 4 SME 5 8 7% 7% 7% 8% 8% 7% 7% 8% 7% 8% 8% 9% 8% 7% 7% 6% 5% 13% 12% 13% 14% 12% 11% 9% 9% 8% 8% 8% 8% 8% 8% 9% 9% 8% 80% 81% 80% 78% 80% 82% 84% 83% 85% 84% 84% 83% 84% 85% 84% 85% 86% 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Exhibit 9: High impairment of assets from outside watchlist i.e. BB and Below book makes asset quality outlook still look grim (Rs Mn) 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Gross slippages 9,110 7,080 6,650 11,850 5,830 20,820 14,740 36,380 87,720 45,600 48,110 35,190 89,360 Recoveries+ Up gradations 1,640 2,250 1,880 1,200 1,800 1,560 7,800 1,400 10,730 3,500 28,040 3,060 10,480 Write offs 5,970 1,940 2,140 9,250 2,574 6,530 3, ,730 1,220 11,940 24,620 25,170 Slippages (%) 1.54% 1.13% 0.98% 1.68% 0.80% 2.72% 1.80% 4.26% 10.05% 5.21% 5.34% 3.71% 8.98% O/s Restructured book 66,900 68,080 81,660 85,150 84,260 77,450 80,720 73,630 67,020 61,090 54,110 53,360 Addition in the qtr 5,700 1,320 15,400 7,400 4,630 1,260 9,270 5,440 % of loan book 2.83% 2.40% 2.7% 2.8% 2.7% 2.3% 2.4% 2.0% 1.7% 1.6% 1.3% 1.3% Additional stressed assets 14,810 8,400 22,050 19,250 10,460 22,060 13,020 15,860 7,730 5,010 16,160 6,270 5/25 Refinancing during the qtr 5,000 15,000 16,000 1,700 7,900 3,870 2,890 O/s 5/25 Refinancing 20,000 36,000 37,700 46,870 50,740 29,920 23,290 25,040 SDR assets during the qtr 5,000 2,050 2,520 3,860 5,010 12,930 O/s SDR assets 5,000 5,750 8,500 10,590 13,600 21,730 20,290 S4A assets during the qtr 3,230 3,380 O/s S4A assets 3,230 4,390 Total 5/25, SDR O/s & S4A 5,000 20,000 41,000 43,450 55,370 61,330 43,520 48,250 49,720 % of loans 0.7% 1.3% 1.3% 1.6% 1.7% 1.3% 1.3% 1.3% Total Restructured Dispensation 104, ,200 96,450 73,900 % of loans 3.0% 2.7% 2.5% 1.8% Corp watch list for potential stress 226, , , ,910 94,360 79,410 60,520 % of loans 6.7% 5.9% 3.9% 3.2% 2.5% 2.1% 1.5% BB & Below Book 158,150 % of loans 3.9% October 17,

8 Exhibit 10: Watch list contribution was slightly lower this quarter, but outside watch list witnessed higher contributions from the stressed sectors Watch list sectors (Rs mn) Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Power 54,307 54,797 56,535 54,346 56,616 54,793 38,733 Iron & Steel 52,044 52,767 16,547 16,637 6,605 6,353 6,657 Textiles 15,840 14,207 Infra Construction 11,314 12,177 11,031 8,873 4,718 3,971 3,631 Oil and Gas 13,577 12,177 17,926 6,655 6,605 CRE 9,051 8,118 Cement 9,051 6,089 6,895 6,655 5,662 1,588 Shipping 6,788 6,089 2,218 1,887 Mining 11,314 6,089 Industrials 6,089 5,516 1, Engineering 4,137 4,436 3,774 3,971 4,236 Infrastructure Roads 4,137 4,436 3,774 3,176 3,026 Construction other than Infra 2,758 3,327 3,774 2, Telecom 2,758 2,421 Services 13,577 Trade Retail & Wholesale 794 1,210 TOTAL 226, , , ,910 94,360 79,410 60,520 % of loans 6.7% 5.9% 3.9% 3.2% 2.5% 2.1% 1.5% Slippages from watch list 25,790 72,880 25,790 35,660 7,970 24,300 Slippages from outside watch list 3,340 9,050 11,070 7,540 15,200 56,800 Watch list slippages to total 71% 83% 57% 74% 34% 30% Outside watch list corporate slippages to total 9% 10% 24% 16% 66% 70% Exhibit 11: ~55% of watchlist has overlap with other impaired assets streams with dominantly restructured Various stressed assets overlapping with watchlist Q3FY17 Q4FY17 Q1FY18 Q2FY18 Normal Watch list 52.0% 49.8% 42.7% 44.6% Overlapped watch list 48.0% 50.2% 57.3% 55.4% SDR & Restructured Overlap 2.4% 1.9% 2.2% 5/25 & Restructured Overlap 1.2% 4.5% SDR 5.3% 12.6% 15.3% 5/25 Refinancing 9.0% 2.8% 3.0% Restructured 31.3% 31.8% 34.6% October 17,

9 Exhibit 12: Axis continues to see large divergence albeit lower than FY16 inspection Divergence Detail as per RBI (Rs m) FY16 FY17 Gross NPAs as on 31 March as reported by the Bank 60,875 2,12,805 Gross NPAs as on 31 March as assessed by RBI 1,55,654 2,69,133 Divergence in Gross NPAs 94,779 56,328 Net NPAs as on 31 March as reported by the Bank 25,221 86,266 Net NPAs as on 31 March as assessed by RBI 96,852 1,29,437 Divergence in Net NPAs 71,631 43,171 Provisions for NPAs as on 31 March as reported by the Bank 33,934 1,22,057 Provisions for NPAs as on 31 March as assessed by RBI 57,082 1,35,214 Divergence in provisioning 23,148 13,157 Exhibit 13: Slippages have mainly come from outside watchlist and mainly on divergence Sectoral Distribution of Q2FY18 Slippages Rs million % Mix Total Slippages 89, % Power Gen & Distribution 25,914 29% Iron & Steel 16,978 19% IT & ITES 12,510 14% Engineering & Electronics 6,255 7% Infrastructure Cons. & Roads 4,468 5% Chemicals & Chemical Products 4,468 5% Cement & Cement Products 4,468 5% Sugar 3,574 4% Real Estate 2,681 3% Paper & Paper Products 2,681 3% Food Processing 1,787 2% Exhibit 14: Change in estimates table We slightly tweak our estimates on NII owing to NIM pressure and increase credit costs (Rs m) Old Revised % Change FY18E FY19E FY18E FY19E FY18E FY19E Net interest income 1,97,422 2,32,691 1,88,686 2,22,127 (4.4) (4.5) Operating profit 1,89,196 2,23,006 1,80,567 2,13,451 (4.6) (4.3) Net profit 67,172 99,092 52,206 86,979 (22.3) (12.2) EPS (Rs) (22.3) (12.2) ABVPS (Rs) (10.2) (8.7) Price target (Rs) (8.0) Recommendation REDUCE REDUCE October 17,

10 Exhibit 15: We maintain our Reduce stance with TP of Rs454 (fromrs494) based on 1.8x Sep 19 ABV rolled over from Mar 19 PT calculation and upside Fair price EVA 452 Fair price P/ABV 456 Average of the two 454 Target P/ABV 1.8 Target P/E 10.6 Current price, Rs 513 Upside (%) 12% Dividend yield (%) 1% Total return (%) 10% Exhibit 16: AXSB s historical P/ABV trends Trading at mean levels P/ABV 3 yr avg. avg. + 1 SD avg. 1 SD Oct 11 Jan 12 Apr 12 Jul 12 Oct 12 Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16 Apr 16 Jul 16 Oct 16 Jan 17 Apr 17 Jul 17 Oct 17 October 17,

11 Income Statement (Rs m) Y/e March E 2019E Int. Earned from Adv. 300, , , ,135 Int. Earned from Invt. 93,776 96, , ,107 Others 15,699 17,944 17,944 18,903 Total Interest Income 409, , , ,145 Interest expense 241, , , ,018 NII 168, , , ,127 Growth (%) Treasury Income 10,186 31,738 24,000 23,000 NTNII 83,528 85, , ,584 Non Interest Income 93, , , ,584 Total Income 503, , , ,729 Growth (%) Operating Expense 101, , , ,260 Operating Profit 161, , , ,451 Growth (%) NPA Provisions 38, , ,496 76,963 Investment Provisions 840 2, Total Provisions 37, , ,986 81,665 PBT 123,938 54,676 74, ,786 Tax Provisions 41,701 17,883 22,374 44,808 Effective Tax Rate (%) PAT 82,237 36,793 52,206 86,978 Growth (%) 11.8 (55.3) Balance Sheet (Rs m) Y/e March E 2019E Par Value No. of equity shares 2,383 2,395 2,395 2,395 Equity 4,766 4,790 4,790 4,790 Networth 531, , , ,043 Adj. Networth 506, , , ,411 Deposits 3,579,676 4,143,788 4,682,480 5,361,440 Growth (%) Low Cost deposits 1,694,450 2,130,500 2,327,193 2,675,359 % of total deposits Total Liabilities 5,398,210 6,014,677 6,895,358 8,022,114 Net Advances 3,387,737 3,730,693 4,308,951 5,019,928 Growth (%) Investments 1,315,241 1,287,934 1,558,382 1,780,152 Total Assets 5,398,210 6,014,677 6,895,358 8,022,114. Quarterly Financials (Rs m) Y/e March Q3FY17 Q4FY17 Q1FY18 Q2FY18 Interest Income 111, , , ,351 Interest Expense 67,673 64,396 64,364 66,955 Net Interest Income 43,337 47,286 46,161 45,396 Non Interest Income 34,002 30,132 29,998 25,855 CEB 18,046 24,229 20,029 21,700 Treasury 15,254 4,280 8,241 3,770 Net Total Income 77,339 77,418 76,160 71,252 Operating Expenses 30,937 33,670 33,248 33,478 Employee Expenses 9,919 9,480 10,883 10,828 Other Expenses 21,018 24,191 22,365 22,650 Operating Profit 46,402 43,747 42,912 37,773 Core Operating Profit 31,148 39,467 34,670 34,003 Provisions 37,958 25,813 23,419 31,404 Loan loss provisions 35,120 22,820 21,770 33,920 Investment Depreciation 320 2, (1,370) Profit before tax 8,444 17,935 19,492 6,369 Tax 2,649 5,684 6,436 2,045 PAT before EO 5,796 12,251 13,056 4,324 Extraordinary item PAT 5,796 12,251 13,056 4,324 Key Ratios Y/e March E 2019E CMP (Rs) Equity Shrs. Os. (m) 2,383 2,395 2,395 2,395 Market Cap (Rs m) 1,222,869 1,229,132 1,229,132 1,229,132 M/Cap to AUM (%) EPS (Rs) Book Value (Rs) Adj. BV (100%) (Rs) P/E (x) P/BV (x) P/ABV (x) DPS (Rs) Dividend Yield (%) Profitability (%) Y/e March E 2019E NIM RoAA RoAE Efficiency Y/e March E 2019E Cost Income Ratio (%) C D Ratio (%) Business per Emp. (Rs m) Profit per Emp. (Rs lacs) Business per Branch (Rs m) 2,193 2,156 2,140 2,149 Profit per Branch (Rs m) Asset Quality Y/e March E 2019E Gross NPAs (Rs m) 60, , , ,535 Net NPAs (Rs m) 25,221 86, , ,633 Gr. NPAs to Gross Adv. (%) Net NPAs to Net Adv. (%) NPA Coverage (%) October 17,

12 Prabhudas Lilladher Pvt. Ltd. 3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai , India Tel: (91 22) Fax: (91 22) Rating Distribution of Research Coverage PL s Recommendation Nomenclature % of Total Coverage 50% 40% 30% 20% 10% 0% 39.8% 43.8% 16.4% 0.0% BUY Accumulate Reduce Sell BUY : Over 15% Outperformance to Sensex over 12 months Accumulate : Outperformance to Sensex over 12 months Reduce : Underperformance to Sensex over 12 months Sell : Over 15% underperformance to Sensex over 12 months Trading Buy : Over 10% absolute upside in 1 month Trading Sell : Over 10% absolute decline in 1 month Not Rated (NR) : No specific call on the stock Under Review (UR) : Rating likely to change shortly DISCLAIMER/DISCLOSURES ANALYST CERTIFICATION We/I, Mr. R Sreesankar (B.Sc ), Mr. Pritesh Bumb (MBA, M.com), Ms. Vidhi Shah (CA), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. 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