Angel Broking neutral on Vijaya Bank

Angel Broking has maintained neutral rating on Vijaya Bank, in its July 27, 2012 research report.

“During 1QFY2013, Vijaya Bank reported 54.2% growth in its net profit to Rs111cr, which was lower than our estimates on account of subdued performance on the Net Interest income front. Key positive from the otherwise disappointing numbers was the stability witnessed on the asset quality front.”

“During 1QFY2013, the bank’s advances grew by 16.0% on a yoy basis, while deposits growth was 14.0% yoy (though still much below peer average). Consequently, the bank’s CD ratio improved by 121bp yoy to 68.6%. Overall CASA deposits grew at a subdued pace of 2.0% yoy, mainly on back of moderate 7.3% yoy growth witnessed in current deposits as savings deposits for the bank remained flat on a yoy basis. Consequently, the bank’s CASA ratio declined to 21.3%. Reported NIM for the bank declined by 27bp qoq, due to sequentially higher cost of deposits and lower yield on advances on a qoq basis. Non-interest income (excluding treasury) witnessed degrowth of 10.3% yoy on back of decline in fee income and lower recoveries. The bank’s asset quality witnessed stability during the quarter, with both gross and net NPA ratios remaining almost flat on a sequential basis at 2.9% and 1.7%, respectively, aided by strong recoveries and upgrades. Annualized slippage ratio for the quarter came in at 3.2% (though higher than 2.8% witnessed in 4QFY2012, but lower than 5.3% witnessed in 3QFY2012). Provision coverage ratio (including technical write-offs) improved by 172bp qoq to 64.1%. Additionally, the bank restructured Rs827cr worth of advances during the quarter, thereby taking its outstanding restructured book to Rs3,629cr (~6.1% of its total advances).”

“During 1QFY2013, though the bank’s asset quality remained stable sequentially, however concerns have not eased off. Also, the bank’s low core equity ratio could lead to further dilution on account of Basel III guidelines. The bank’s RoA is likely to remain at subdued levels of ~0.5% even in FY2014. Currently, the stock trades at 0.7x of FY2014E ABV, which is relatively expensive than its peers; hence, we recommend a Neutral rating on the stock,” says Angel Broking research report. 

Public holding more than 90% in Indian cos

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