Angel Broking neutral on Vijaya Bank

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Angel Broking neutral on Vijaya Bank

Angel Broking has maintained neutral rating on Vijaya Bank, in its August 02, 2011 research report.

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Angel Broking has maintained neutral rating on Vijaya Bank , in its August 02, 2011 research report.

"For 1QFY2012, Vijaya Bank posted disappointing numbers. Net profit declined by 58.4% yoy to `72cr, significantly below our estimates due to higher provisioning expenses than built in by us. Asset-quality concerns persisted during the quarter, while NIM declined sequentially by 50bp."

"For 1QFY2012, the bank's advances grew strongly by 21.8% yoy (up 4.9% qoq) to `51,100cr, while deposits grew by healthy 21.3% yoy (up 3.8% qoq). CASA deposits declined sequentially by 1.4% to `18,240cr (up 20.8% yoy). The CASA ratio as of 1QFY2012 stood at 24.0%. During the quarter, with rising cost of funds for the system as a whole, the bank's cost of deposits increased substantially by 88bp qoq to 7.3%, while yield on advances increased by 83bp qoq to 11.3%. Consequently, reported NIM dipped by 50bp qoq to 2.3% from 2.8% in 1QFY2012. Non-interest income increased by 17.9% qoq to `168cr in 1QFY2012, mainly due to 92.9% qoq growth in treasury income to `54cr. During 1QFY2012, the bank's asset-quality concerns continued with slippages considerably high at `612cr. Annualised slippage ratio stood at 5.0% for 1QFY2012. Operating expenses decreased substantially by 48.0% qoq (down 11.8% yoy) on the back of a 56.2% qoq (down 11.8% yoy) decrease in employee costs due to a high base in 4QFY2011."

"During 1QFY2012, Vijaya Bank's asset-quality concerns persisted with very high slippages. However, the bank expects substantial recoveries during FY2012, which we have factored in our estimates. Despite this, RoA is likely to remain at ~0.4% in FY2012. Currently, the stock is trading at 0.8x of FY2013E ABV, which is relatively expensive than its peers; hence, we recommend a Neutral rating on the stock," says Angel Broking research report.

FIIs holding more than 30% in Indian cos

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