1
Please refer to important disclosures at the end of this report
1
1
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.
BUY
CMP `165
0.7
Reuters Code
CTBK.NS
CUBK:IN
1
BSE Sensex
31,813
Nifty
9,852
Face Value (`)
Banks
Market Cap (` cr)
10,846
52 Week High / Low
182.62/107.35
Avg. Daily Volume
38,403
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
City Union Bank Ltd
Others | Banks
July 20, 2017
2
City Union Bank | Banks
June 5, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL
and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot
testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.
While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from
or in connection with the use of this information.
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)