Sunday, October 16, 2011

Share Market Update on Central Bank of India for 1QFY2012


Share Market Update on Central Bank of India for 1QFY2012 with a Neutral recommendation.

For 1QFY2012, Central Bank of India posted a 16.6% yoy decline in its net profit primarily due to higher provisions. However, results were above our estimates on lower-than-estimated operating expenses. A sharp sequential dip in NIM and high slippages despite the pending switchover to system-based NPA platform were the key highlights of the results. We maintain our Neutral view on the stock.
NIM dips on lower yield on investments; slippages remain elevated: The bank’s business momentum slowed during the usually lean quarter. Advances declined by 2.8% qoq (up 17.2% yoy) and deposits increased by 3.6% qoq (up 20.3% yoy). CASA deposits growth moderated to 14.7% yoy, resulting in a 259bp qoq decline in CASA ratio to 32.6%. Bulk deposits and CDs constituted a relatively higher ~33% of total deposits. The reduction in CASA ratio and the higher interest rate environment resulted in a sharp 72bp qoq rise in cost of deposits to 6.8%. The yield on advances went up by 77bp qoq to 11.4%. Reported NIM declined sharply by 48bp qoq to 3.0% primarily due to fall in yield on investments (fall of 73bp qoq). The sequential decline in NIM was exacerbated by the benefit of interest on income tax refund of ~`130cr in 4QFY2011. Overall asset quality of the bank deteriorated during the quarter, with annualised slippage ratio remaining elevated at 1.8% (1.1% in 1QFY2011) and net NPAs rising by 27.7% qoq. Slippages remained elevated at 1.8% as compared to 1.1% in 1QFY2011. Provision coverage ratio including technical write-offs declined to 65.2% from 67.6% in 4QFY2011. The bank is yet to switchover to the system-based NPA recognition platform, which could result in a substantial rise in slippages given the bank’s rural branches (37%) and a relatively large agri (16%) portfolio.
Outlook and valuation: At the CMP, the stock is trading at cheap valuations of 0.8x FY2013E ABV compared to its trading range of 0.5–1.5x with a median of 1.1x since listing in 2007. However, due to near-term asset-quality concerns because of system-based NPA recognition, we remain Neutral on the stock.

12 comments:

india said...

The Information you have shared here is very informative and the stuff is really good.
share trading on line

Anonymous said...

Indian stock market is one of the most happening and emerging market. Major Indian stock exchanges are BSE and NSE and both are of world class standards. Very nice post here thanks for it I always like and search such topics and everything connected to them. I really appreciate it.

Anonymous said...

Nice blog good information abouts stock market. I really appreicate your post and you explain and every point very well.

Anonymous said...

He is one of the top blogger on the internet right now.
Thanks & Regards : commodity trading Tips

Keynote Capitals Ltd. said...

Excellent Blog! I really admire your thinking Online share broking and the way you have put these information in this post. Thanks for sharing an informative post.

Raahi said...

BSE SENSEX and NIFTY shed the previous gains and ended almost flat on WEDNESDAY after investors booked profit and index heavy weight and India’s largest telecom operator Bharti Airtel posted poor quarterly numbers.
Stock Tips

Unknown said...

I feel strongly about this and I take pleasure in learning about this topic. If possible, as you gain data, please add to this blog with more information...
Investing stocks

Unknown said...

A good informative post that you have shared and thankful your work for sharing the information. Got some appealing information and would like to give it a try. Applaud your work and keep sharing your information.
Stocks and investments

Unknown said...

really great information posted by you, it is contain information about share market. thanks for posting...keep it up.
CapitalStars

Unknown said...

Thanks for sharing this informative post.It is collect financial market information.Your post is good. I shared this post 24 hour Des Moines Towing site. Every person gained information about finance. Thanks for sharing your work experience.

Best call center services said...

Positive site, where did u come up with the information on this posting?I have read a few of the articles on your website now, and I really like your style. Thanks a million and please keep up the effective work.

data entry services

Sudeshna s. said...

Thank you for sharing the post it was really helpful.ITC share price