BSE SENSEX S&P CNX 20,491 6,079 Bloomberg CBK IN Equity Shares (m) 443.0 M.Cap. (INR b) / (USD b) 109.4/1.7 52-Week Range (INR) 550/190 1, 6, 12 Rel. Per (%) 5/-42/-52 Financials & Valuation (INR Billion) Y/E MAR 2013 2014E 2015E NII 78.8 88.6 104.5 OP 58.9 65.8 74.4 NP 28.7 21.4 24.9 EPS (INR) 64.8 48.3 56.3 EPS Gr. (%) -12.5-25.5 16.5 BV/Sh. 513.4 551.2 595.1 P/E (x) 3.8 5.1 4.4 P/BV (x) 0.5 0.4 0.4 RoE (%) 13.3 9.1 9.8 ROA (%) 0.7 0.5 0.5 13 November 2013 2QFY14 Results Update Sector: Financials Canara Bank CMP: INR250 TP: INR300 Neutral Sequentially flat NIM disappointing: Despite strong loan growth (+13% QoQ and +30% YoY), asset reallocation (CD ratio up 700bp QoQ to 72%) and higher share of low cost deposits (CASA ratio up 140bp), sequentially flat NIM disappointed us. Led by high loan growth, NII (INR7.7b) was 7% above our estimate. Guidance of strong loan growth concerning: QoQ loan growth was driven by Retail Housing (+28% QoQ; +42% YoY), MSME (+17% QoQ; +30% YoY), NBFC (+50% QoQ; +60% YoY) and Power (+16% QoQ; 60% YoY). These segments contributed 80%+ of the incremental loans, QoQ. The management has guided strong loan growth of 25%+ for FY14, which is a concern in an uncertain environment. Lower slippages: Net slippages declined to INR6.4b (annualized 1.2% of loans) v/s INR13.3b a quarter ago (2.4%), led by lower slippages of INR15.2b (2.8%) v/s INR26.9b (4.8%). Incremental restructuring was INR10b (INR16.8b in 1Q) and OSRL (ex SEB/AI) stood at INR109b (3.9% of loans). Other highlights: (a) Led by higher loan growth, fees grew 33%/31% YoY in 2Q/1H, (b) Savings deposits grew 8% QoQ and 14% YoY, (c) Share of bulk deposits increased 40bp QoQ to 13.8% (38% in 2QFY13), and (d) Investments declined 12% QoQ. Valuation and view: While valuations at 0.4x FY15E BV appear attractive, we remain concerned about strong loan growth, low CASA ratio (26%), high unprovided MTM (INR7.1b) and high share of infra loans (19%). Further, additional capital infusion will lead to BV dilution of ~2%. Key positives are (a) NSL (ex SEB/AI) of ~6.2%, in line with peers, and (b) relatively better capitalization, with CET1 of ~8.5%. Maintain Neutral. Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415 Sohail Halai (Sohail.Halai@MotilalOswal.com); +91 22 39825430 Investors are advised to refer through disclosures made at the end of the Research Report.
Quarterly performance: Core operations disappoint (INR m) Y/E March 2QFY14A 2QFY14E Var. (%) Comments Net Interest Income 21,912 20,488 7 % Change (YoY) 12 5 Strong loan growth of 13% QoQ drives NII surprise Other Income 7,730 7,691 1 Strong fee income performance Net Income 29,642 28,179 5 Operating Expenses 15,392 13,954 10 Other operating expenses higher than expected Operating Profit 14,250 14,225 0 % Change (YoY) 11 11 Other Provisions 6,740 9,589-30 MTM lower than expected Profit before Tax 7,509 4,636 62 Tax Provisions 1,250 927 35 Tax rate lower than expected Net Profit 6,259 3,709 69 % Change (YoY) -5-44 Lower provisions and high loan growth driving PAT beat Strong loan growth at low loan spreads A concern CBK utilized excess liquidity in the balance sheet and grew its loan book aggressively by 13% QoQ. Management mentioned that large part of the growth during the quarter came from AA and above rated corporate. More than 80% of the incremental growth is driven by CRE, NBFC, retail housing, SEBs, disbursements to sanctions for non SEB power projects and MSMEs. Growth in the CRE segment was strong at 55% QoQ, however it was on a lower base For incremental growth focus remains on retail segment which grew 20% QoQ and 36% YoY. Within retail strong growth was witnessed in the housing sector (+28% QoQ, 42% YoY). Led by tight liquidity conditions and lowest BASE rate in the system, CBK opportunistically grew in NBFCs segment (+ 51% QoQ and 60% YoY). Infra loans grew 12% QoQ and 36% YoY led by 16% QoQ and 60% YoY growth in power segment. Within power, SEB loans (75% of power loans) grew 19% QoQ and 40% YoY. Flat NIMs despite utilizing excess liquidity in balance sheet Disappointed Despite strong loan growth (+13% QoQ and +30% YoY), asset reallocation (CD ratio up +700bp QoQ) and high share of low cost deposits (CASA ratio up 140bps), flat NIMs QoQ disappointed us. Led by high loan growth NII was 7% above estimates. Derived 2Q cost of funds was down 10bp QoQ to 6.8% and Yield on funds were flat QoQ at 8.8%. In a tight liquidity conditions 25bp drop in yield on loans to 10.5% disappointed us. Net stress addition lower QoQ NSL (ex SEB/AI) at 6.2% Slippages during the quarter declined to INR15.2b (annualized slippage ratio of 2.8%) v/s INR26.9b in 1QFY14. Recoveries and upgrades during the quarter were at INR8.9b (v/s 13.6b in 1QFY14) and write offs were at INR4.9b (v/s INR2.6b in 1QFY14). 13 November 2013 2
GNPA/NNPA in absolute terms each increased 2/4%+ QoQ and in % terms GNPA and NNPA was at 2.6% (2.9% in 1QFY14) and 2.3% (2.5% in 1QFY14). PCR (including technical write-off) lower at 57.8% as compared to 58.2% in 1QFY14. During the quarter, CBK restructured loans worth of INR10b (0.4% of loans). O/s standard restructured loan portfolio stood at INR181b (6.4% of loans), of which power (INR77.6b) and aviation (INR10.4b) together formed ~INR88b i.e. (~45% of restructured loan). Other highlights CBK transferred INR196b of government securities from AFS to HTM portfolio and booked a loss of INR1.4b. As of 1HFY14, MTM requirement on AFS portfolio stood at INR10.6b of which CBK was required to make provisions of INR3.6b (1/3 rd of amortized amount as per RBI guideline) CBK was carrying INR3b of MTM provisions on investments as of 1QFY14 thus, just additional INR0.8b provided during the quarter. As of 1HFY14, an unprovided MTM provision on balance sheet stands at INR7.1b which is to be recognized in 2HFY14. Valuations and view While valuations at 0.4x FY15 PBV is attractive, we remain concerned about strong loan growth, low share of CASA ratio (25.6%), high un-provided MTM (INR7.1b) and high share of infra loans (19% ). Further additional capital infusion of INR5b will lead to capital dilution of ~4% and BV dilution of ~2%. Key triggers are a) Sooner than expected economic recovery b) fall in interest rates and c) improvement in liquidity in the system Key positives are a) NSL (ex SEB/AI) of ~6.2% is in-line with peers and b) relatively better capitalization with CET1 of ~8.5%. Maintain Neutral. Conference Call highlights Optimistic about growth; target loan growth of 26-30% for FY14 Growth was broad based. One of the lowest base rate in the industry has helped the bank to attract customers. Sanctioned 7 projects in 1H of INR2.5b and above, totaling INR60b (consortium lenders in 5-6 projects) at the yield of 11-12.5%. Expect growth to be in the range of 26-30% for FY14. Deposit growth is expected to be 17% for FY14. Growth in power generation has increased significantly on account of disbursements to SEBs and is short term loans which will get repaid in ensuing quarters. Private power projects is 25% of the overall power exposure. During the quarter fresh disbursement was given to TN SEB INR10b, Dakshin Haryana apart from other SEBs Growth in NBFCs exposure is driven by disbursement to high rated corporate like HDFC, India Bull housing finance, Capital First, Tata housing and Dewan housing where the ticket size would be INR3-5b. Average lending rate in NBFC segment was 11.25-12.5% Most of the growth in SME segment is coming from two scheme Pragatti and Unnati which are under CGTSME Home loans are partially on account of increasing tie-ups with the builders. During 1HFY14 bank has bought out portfolio of INR8.5b. 13 November 2013 3
Restructuring pipeline of INR30-35b; Efforts increase to improve recoveries Strong monitoring mechanism and more efforts were put in for containing slippages. Recoveries effort put in has also led to net slippages being lower. The accounts slipped during the quarter: (1) Bharti shipyard INR2.2b, (2) Abhijeet group - INR2b and (3) forever diamonds INR1.6b. Rest has been less than INR500m. One large account allied strip of INR3b which slipped into NPA in 1QFY14 was upgraded during the quarter. Restructuring done during the quarter was led by two large accounts worth INR7.5b. Of the O/s standard restructured loan SEB and AI forms INR60b and INR12b. Bonds are yet to come from the discoms as the package was still under implementation at end of 2QFY14. Restructuring pipeline is of INR30-35b. Dicoms expected to be restructured in 2H: Ajmer - INR1.1b, Jaipur INR7.5b, Uttar Haryana INR7.7b and Dakshin Haryana - INR6.7b. 13 projects could come up for restructuring in coming few quarters (1) Educomp INR2.1b, (2) PSL INR3b, (3) Soma INR2b and (4) Electro therm INR4.1b, (4) Ideal energy INR4.2b and (5) Gangotri INR1.4b Other highlights Efforts will be to improve NIMs to the level of 2.5%. For wage provisions bank has made INR550m during the quarter and overall provision made so far is INR2b. Bank has adopted latest mortality table for calculation of pension and gratuity liability. Added 500+ branches and 250+ ATMs in the quarter. Focusing of alternate delivery channels to bring in cost efficiency. High growth in fee income was driven improvement across streams (on a lower base). CET1 is 9% (including 1HFY14 profits) and CBK is expecting capital infusion of INR5b in 3Q. CBK is also hopeful of receiving additional INR6b in 2H from GOI. Bulk deposit has come down to 13.5% from high of 44-45%. 13 November 2013 4
Upgrading earning estimates to factor in higher loan growth INR b Old Estimate Revised Estimate Change (%) FY14 FY15 FY14 FY15 FY14 FY15 Net Interest Income 83.0 98.3 88.6 104.5 6.8 6.3 Other Income 36.8 38.2 38.2 39.5 3.9 3.4 Total Income 119.7 136.5 126.8 144.0 5.9 5.5 Operating Expenses 57.4 65.5 61.0 69.6 6.3 6.3 Operating Profits 62.4 71.1 65.8 74.4 5.5 4.7 Provisions 36.6 39.8 39.7 43.2 8.5 8.6 PBT 25.8 31.3 26.1 31.2 1.2-0.3 Tax 5.2 7.5 4.7 6.2-8.9-16.9 PAT 20.6 23.8 21.4 24.9 3.8 4.9 Loans 2,809 3,259 3,027 3,512 7.8 7.8 Deposits 4,021 4,665 4,128 4,788 2.7 2.7 Margins (%) 2.04 2.11 2.14 2.18 Credit Cost (%) 0.60 0.90 0.65 0.90 RoA (%) 0.47 0.47 0.48 0.48 RoE (%) 8.8 9.4 9.1 9.8 Canara Bank: One-year forward P/BV Canara Bank: One-year forward P/E 1.9 P/B (x) Avg(x) Peak(x) Min(x) 12 P/E (x) Avg(x) Peak(x) Min(x) 1.6 1.3 1.0 0.7 0.4 0.1 Oct-06 May- Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 1.0 0.4 Oct-10 Apr-11 Oct-11 1.7 Apr-12 Oct-12 Apr-13 0.4 Oct-13 9 6 3 0 Oct-06 May-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 5.8 Oct-10 9.4 Apr-11 Oct-11 2.3 Apr-12 Oct-12 Apr-13 4.7 Oct-13 Dupont Analysis Y/E MARCH FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E FY15E Net Interest Income 3.0 2.9 2.7 2.0 2.4 2.3 2.6 2.2 2.0 2.0 2.0 Fee income 0.6 0.7 0.6 0.8 0.6 0.6 0.5 0.5 0.4 0.5 0.5 Core Income 3.6 3.6 3.3 2.9 3.0 2.9 3.1 2.7 2.4 2.5 2.5 Operating Expenses 2.0 1.9 1.7 1.6 1.5 1.4 1.5 1.3 1.3 1.4 1.3 Cost to Core Income 56.5 53.2 51.9 56.5 51.3 49.4 47.3 49.2 53.6 55.5 54.3 Employee cost 1.3 1.2 1.1 1.0 0.9 0.9 1.0 0.8 0.8 0.9 0.9 Other operating expenses 0.7 0.7 0.6 0.7 0.6 0.5 0.5 0.5 0.5 0.5 0.5 Core operating Profits 1.55 1.70 1.59 1.24 1.46 1.47 1.64 1.36 1.13 1.10 1.13 Trading and others 0.9 0.4 0.4 0.5 0.5 0.6 0.4 0.3 0.4 0.4 0.3 Operating Profits 2.46 2.10 1.95 1.71 1.98 2.09 2.03 1.67 1.50 1.48 1.44 Provisions 1.2 0.8 0.8 0.6 0.7 0.5 0.4 0.5 0.6 0.9 0.8 NPA provisions 0.8 0.5 0.3 0.5 0.4 0.6 0.3 0.4 0.5 0.4 0.6 Other Provisions 0.5 0.3 0.5 0.1 0.2-0.1 0.0 0.2 0.1 0.5 0.3 PBT 1.22 1.27 1.12 1.10 1.29 1.58 1.67 1.15 0.93 0.59 0.60 Tax 0.16 0.16 0.17 0.20 0.25 0.33 0.33 0.23 0.20 0.11 0.12 Tax Rate 13.29 12.96 14.96 17.85 19.44 20.93 19.90 19.59 21.79 18.00 20.00 RoA 1.1 1.1 1.0 0.9 1.0 1.2 1.3 0.9 0.7 0.5 0.5 Leverage (x) 18.9 18.7 19.7 21.1 21.9 21.5 19.7 18.5 18.2 18.9 20.3 RoE 20.0 20.7 18.8 19.1 22.7 26.8 26.4 17.1 13.3 9.1 9.8 13 November 2013 5
Strong loan growth CD ratio improves as bank utilizes excess liquidity (%) 72.6 71.4 70.2 72.2 72.8 70.7 72.1 72.0 71.6 69.7 69.3 71.1 67.4 64.1 67.4 68.1 65.4 71.8 Strong loan growth of 13% QoQ driven by CRE, NBFC, Power and retail housing segment for the quarter 1QFY10 1HFY10 9MFY10 FY10 1QFY11 1HFY11 9MFY11 FY11 1QFY12 1HFY12 9MFY12 FY12 1QFY13 1HFY13 9MFY13 FY13 1QFY14 CD ratio improved with strong advances growth of 13% QoQ, 30% YoY and deposit growth of 2.5% QoQ, 16.3% YoY 1HFY14 CASA ratio improves QoQ CASA Ratio (calc,%) CASA YoY gr. (%) 29 28 22 23 22 10 15 10 12 13 14 8 8 1 2 3 (1) (4) 28 29 29 29 29 29 29 28 25 26 24 24 23 25 25 24 23 24 NIM stable QoQ despite strong loan growth (%) 2.7 2.7 2.7 2.8 3.0 3.2 3.6 3.1 2.4 2.5 2.5 2.5 2.3 2.4 2.4 2.4 2.2 2.2 1QFY10 1HFY10 9MFY10 FY10 1QFY11 1HFY11 9MFY11 FY11 1QFY12 1HFY12 9MFY12 FY12 1QFY13 1HFY13 9MFY13 FY13 1QFY14 CASA ratio improved with growth coming from both CA of 6% QoQ, 16% YoY and SA of 8% QoQ, 14% YoY 1HFY14 1QFY10 1HFY10 9MFY10 FY10 1QFY11 1HFY11 9MFY11 FY11 1QFY12 1HFY12 Asset reallocation (CD ratio up 700bp QoQ) and higher share of low cost deposits (CASA ratio up 140bp) helped bank only to keep NIMs stable indicating pressure on loan spreads 9MFY12 FY12 1QFY13 1HFY13 9MFY13 FY13 1QFY14 1HFY14 GNPA performance better than the peers Gross NPA (%) Net NPA (%) Slippages (INR b) decline QoQ (INR b) 26.9 1.5 1.0 1.5 1.1 1.4 1.1 1.5 1.1 1.7 1.3 1.7 1.4 1.8 1.5 1.7 1.5 2.0 1.7 2.6 2.1 2.8 2.4 2.6 2.2 2.9 2.5 2.6 2.3 7.7 3.9 5.1 18.4 19.2 13.7 15.0 12.4 8.6 11.2 13.1 10.9 15.2 1QFY11 1HFY11 9MFY11 FY11 1QFY12 1HFY12 9MFY12 FY12 1QFY13 1HFY13 9MFY13 FY13 1QFY14 1HFY14 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 Asset quality remains better than peers with GNPA/NNPA in abs terms increased 2/4% QoQ Source: Company, MOSL Of the accounts slipped during the quarter three large accounts formed INR5.8b Source: Company, MOSL 13 November 2013 6
Quarterly Snapshot FY13 FY14 Variation (%) Cumulative Numbers INR m 1Q 2Q 3Q 4Q 1Q 2Q QoQ YoY 1HFY13 1HFY14 YoY Gr (%) Profit and Loss Net Interest Income 18,435 19,568 19,880 20,906 19,911 21,912 10 12 38,003 41,823 10 Other Income 6,926 6,081 8,458 10,065 12,383 7,730-38 27 13,007 20,113 55 Trading profits 988 740 2,510 2,520 4,440 680-85 -8 1,728 5,120 196 Forex Income 1,299 920 1,080 1,350 1,780 1,180-34 28 2,219 2,960 33 Recoveries 468 640 590 1,330 800 850 6 33 1,108 1,650 49 Core Fees 4,171 3,781 4,278 4,865 5,363 5,020-6 33 7,952 10,383 31 Total Income 25,362 25,649 28,338 30,971 32,294 29,642-8 16 51,010 61,936 21 Operating Expenses 11,424 12,828 13,174 13,994 13,311 15,392 16 20 24,252 28,703 18 Employee 7,430 7,911 8,311 8,884 8,871 9,326 5 18 15,341 18,197 19 Others 3,994 4,917 4,864 5,110 4,441 6,066 37 23 8,911 10,506 18 Operating Profits 13,938 12,821 15,164 16,977 18,983 14,250-25 11 26,759 33,232 24 Provisions 4,185 4,211 6,259 7,524 9,162 6,740-26 60 8,397 15,902 89 NPA provisions 4,770 4,444 5,940 3,460 4,430 3,470-22 -22 9,214 7,900-14 Provisions on Invst. -2,050-1,203-1,290 840 880 850-3 -171-3,253 1,730-153 Others 1,465 970 1,609 3,224 3,852 2,420-37 150 2,435 6,272 158 PBT 9,752 8,610 8,905 9,454 9,821 7,509-24 -13 18,362 17,330-6 Taxes 2,000 2,000 1,800 2,200 1,900 1,250-34 -38 4,000 3,150-21 PAT 7,752 6,610 7,105 7,254 7,921 6,259-21 -5 14,362 14,180-1 Asset Quality GNPA 44,966 56,095 60,901 62,602 73,289 74,751 2 33 NNPA 37,556 45,686 51,347 52,781 62,092 64,593 4 41 GNPA (%) 2.0 2.6 2.8 2.6 2.9 2.6-27 6 NNPA (%) 1.7 2.1 2.4 2.2 2.5 2.3-18 18 PCR (Calculated, %) 16.5 18.6 15.7 15.7 15.3 13.6 N.A. N.A. PCR (Reported, %) 66.5 63.0 61.0 61.4 58.2 57.8-41 N.A. Slippages 14,970 19,220 13,140 10,860 26,880 15,200-43 -21 Slippage Ratio (%) 2.8 3.5 2.4 1.9 4.8 2.8-195 -71 Credit Cost (%) 0.8 0.8 1.1 0.6 0.7 0.5-20 -28 Restructured loans* 129,559 137,749 133,794 159,010 172,660 180,530 5 31 % to Loans 5.7 6.4 6.1 6.6 6.9 6.4-49 4 Ratios (%) Fees to Total Income 16.4 14.7 15.1 15.7 16.6 16.9 15.6 16.8 Cost to Core Income 50.5 54.9 54.5 54.3 52.7 57.2 52.8 55.0 Tax Rate 20.5 23.2 20.2 23.3 19.3 16.6 21.8 18.2 CASA (cal) 23.3 24.8 25.1 24.2 23.1 24.3 Loan/Deposit 67.4 64.1 67.4 68.1 65.4 71.8 CAR 13.2 13.1 12.6 12.4 11.4 11.0 Tier I 10.1 10.1 9.8 9.8 0.0 0.0 Margins - Cumulative (%) Yield on loans 11.1 11.2 11.1 11.1 10.7 10.6-11 -57 Yield On Investments 8.1 8.1 8.1 8.1 8.0 8.0-1 -14 Cost of Deposits 7.9 7.8 7.8 7.7 7.5 7.5-4 -33 Margins 2.3 2.4 2.4 2.4 2.2 2.2 1-13 Balance sheet (INR b) Loans 2,256 2,158 2,182 2,422 2,499 2,811 12 30 Retail Loans 228 222 213 231 252 303 20 36 Deposits 3,346 3,368 3,240 3,559 3,820 3,916 3 16 CASA Deposits 779 836 812 861 883 953 8 14 Savings Deposits 665 705 687 712 739 801 8 14 Current Deposits 114 131 125 149 144 152 6 16 Investments 1,117 1,207 1,188 1,211 1,361 1,195-12 -1 * Bank changed its accounting treatment from borrower-wise classification to facility wise in 4QFY13 13 November 2013 7
EPS: MOSL forecast v/s consensus (INR) MOSL Consensus Variation Forecast Forecast (%) FY14 48.3 58.7-17.6 FY15 56.3 71.8-21.6 Stock performance (1-year) Shareholding pattern (%) Sep-13 Jun-13 Sep-12 Promoter 67.7 67.7 67.7 Domestic Inst 13.1 13.3 12.4 Foreign 12.1 12.8 13.3 Others 7.2 6.2 6.6 13 November 2013 8
Financials and valuation Income Statements (INR Billion) Y/E March 2012 2013 2014E 2015E Interest Income 308.5 340.8 393.4 445.8 Interest Expense 231.6 262.0 304.9 341.3 Net Interest Income 76.9 78.8 88.6 104.5 Change (%) -0.1 2.5 12.4 18.0 Non Interest Income 29.3 31.5 38.2 39.5 Net Income 106.2 110.3 126.8 144.0 Change (%) 1.0 3.9 14.9 13.6 Operating Expenses 46.7 51.4 61.0 69.6 Pre Provision Profits 59.4 58.9 65.8 74.4 Change (%) -2.4-0.9 11.7 13.1 Provisions (excl tax) 18.6 22.2 39.7 43.2 PBT 40.8 36.7 26.1 31.2 Tax 8.0 8.0 4.7 6.2 Tax Rate (%) 19.6 21.8 18.0 20.0 Profits for Equity SH 32.8 28.7 21.4 24.9 Change (%) -18.5-12.5-25.5 16.5 Equity Dividend (Incl tax) 5.7 6.7 5.0 5.8 Core PPP* 48.2 44.5 49.0 58.5 Change (%) -2.1-7.6 10.1 19.4 Balance Sheet (INR Billion) Y/E March 2012 2013 2014E 2015E Equity Share Capital 4.4 4.4 4.4 4.4 Reserves & Surplus 222.5 244.3 260.8 279.9 Net Worth 226.9 248.8 265.2 284.3 Deposits 3,270.5 3,558.6 4,127.9 4,788.4 Change (%) 11.5 8.8 16.0 16.0 of which CASA Dep 796.1 860.6 982.3 1,100.9 Change (%) -4.2 8.1 14.1 12.1 Borrowings 155.3 202.8 245.1 280.1 Other Liabilities & Prov. 88.9 113.3 145.5 176.6 Total Liabilities 3,741.6 4,123.4 4,783.7 5,529.4 Current Assets 281.8 347.1 324.5 376.0 Investments 1,020.6 1,211.3 1,271.9 1,462.7 Change (%) 22.0 18.7 5.0 15.0 Loans 2,324.9 2,421.8 3,027.2 3,511.6 Change (%) 10.0 4.2 25.0 16.0 Fixed Assets 28.6 28.6 28.4 27.7 Other Assets 85.8 114.6 131.7 151.5 Total Assets 3,741.6 4,123.4 4,783.7 5,529.4 Asset Quality (INR Billion) Y/E March 2012 2013 2014E 2015E GNPA 40.3 62.6 85.3 110.5 NNPA 33.9 52.8 73.1 84.3 GNPA Ratio 1.7 2.6 2.8 3.1 NNPA Ratio 1.5 2.2 2.4 2.4 PCR (Excl Tech. write off) 16.0 15.7 14.3 23.7 PCR (Incl Tech. Write off) 67.6 61.4 56.2 57.8 Ratios Y/E March 2012 2013 2014E 2015E Spreads Analysis (%) Avg. Yield-Earning Assets 9.5 9.4 9.5 9.3 Avg. Yield on loans 10.6 10.3 10.5 10.2 Avg. Yield on Investments 7.6 8.2 8.0 7.6 Avg. Cost-Int. Bear. Liab. 7.1 7.3 7.5 7.2 Avg. Cost of Deposits 7.1 7.4 7.5 7.2 Interest Spread 2.4 2.1 2.0 2.1 Net Interest Margin 2.4 2.2 2.1 2.2 Profitability Ratios (%) RoE 17.1 13.3 9.1 9.8 RoA 0.9 0.7 0.5 0.5 Int. Expense/Int.Income 75.1 76.9 77.5 76.6 Fee Income/Net Income 15.4 16.3 13.5 14.9 Non Int. Inc./Net Income 27.6 28.6 30.1 27.4 Efficiency Ratios (%) Cost/Income* 44.0 46.6 48.1 48.3 Empl. Cost/Op. Exps. 63.6 63.3 63.5 63.2 Busi. per Empl. (Rs m) 125.9 135.6 150.3 172.9 NP per Empl. (Rs lac) 7.8 6.7 4.9 5.6 Asset-Liabilty Profile (%) Loans/Deposit Ratio 71.1 68.1 73.3 73.3 CASA Ratio 24.3 24.2 23.8 23.0 Investment/Deposit Ratio 31.2 34.0 30.8 30.5 G-Sec/Investment Ratio 87.0 84.2 97.4 98.2 CAR 13.8 12.4 11.2 10.0 Tier 1 10.4 9.8 8.7 7.8 Valuation Y/E March 2012 2013 2014E 2015E Book Value (INR) 463.8 513.4 551.2 595.1 Change (%) 14.6 10.7 7.4 8.0 Price-BV (x) 0.5 0.5 0.4 0.4 Adjusted BV (INR) 414.1 436.0 444.0 471.5 Price-ABV (x) 0.6 0.6 0.6 0.5 EPS (INR) 74.1 64.8 48.3 56.3 Change (%) -18.5-12.5-25.5 16.5 Price-Earnings (x) 3.3 3.8 5.1 4.4 Dividend Per Share (INR) 11.0 13.0 9.7 11.3 Dividend Yield (%) 4.5 5.3 3.9 4.6 13 November 2013 9
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