Please refer to important disclosures at the end of this report
City Union Bank (CUB) is a mid-sized private sector bank. CUB overall loan book
growth was 6%, 11%, 17% and 13.5% in FY14, FY15, FY16 and FY17
respectively. CUB is well placed among regional players and comfortable on the
capital adequacy front with tier I ratio at 15.4%. Net interest income grew
steadily by 17.4%YoY at Rs 3.1bn largely driven by margin expansion.CUB has
been able to maintain NIMs of 3%+ for over a decade across economic cycles
despite a low CASA base (~20% of total deposits). This is owing to the structure
of its loan book, which is focused on the SME/MSME segment (~53% of loans)
that is high yielding and wherein re-pricing is possible. It maintained 25-30%
credit growth and improved its NNPA from 7-8% in the FY00 crisis to <1% in
FY10 while maintaining it till FY13 and for FY17 NNPA was at 1.71%. In FY17,
slippages again came in higher at Rs 480cr (Rs429cr in FY16) owing to weak
economic scenario. Despite deterioration, CUB’s asset quality remains
manageable compared to its peers. Lower exposure to stressed segments like the
infra segment at ~1% also provide comfort. The company has a RoE 14.08%
and is trading at a valuation P/Bv 3.05x of TTM earnings. Hence BUY.
CMP `165
Reuters Code
BSE Sensex
Face Value (`)
Market Cap (` cr)
52 Week High / Low
Avg. Daily Volume
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
City Union Bank Ltd
Others | Banks
July 20, 2017
City Union Bank | Banks
June 5, 2017
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement City Union Bank
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)