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Why should investors consider City Union bank despite sharp fall in asset quality in FY21?

City Union Bank's management had cautioned about the asset quality stress much in advance

May 31, 2021 / 10:13 AM IST
Why should investors consider City Union bank despite sharp fall in asset quality in FY21?

PRO Only Highlights
Quarterly performance largely backed by improved realisations
Medium-term triggers China plus and protectionist measures for tyre industry
Valuations not inexpensive; but improved medium-term outlook

City Union Bank (CUB) (CMP: Rs 174; Mcap: 12,848 crore) a mid–sized private sector bank, has reported subdued performance in FY21. While loan growth was muted and asset quality deteriorated, the bank managed to report an earnings growth of 24 per cent year on year (YoY) mainly aided by treasury income, better margins and contained operating expenses. CUB mainly extends loans to trading and MSME segments. The pandemic has disrupted cash flows of these small businesses. Consequently, CUB’s asset quality...

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