January 23, 2017 / 16:14 IST
The pace of incremental slippages, while declining over the last four quarters, remains elevated for CBK; for Q3, slippages declined to Rs 22.3bn from Rs 24.5bn in Q2. Most slippages have been emerging from the bank’s watchlist of SMA-2 accounts which aggregated to Rs 180bn as of Q3. However, CBK hopes to contain slippages at Rs 10bn-15bn in Q4 as two large accounts likely get resolved by Mar’17 via RBI’s special schemes.
Outlook
CBK reported an in-line PAT (Rs 3.2bn) and stable NIMs (2.2%) for Q3FY17. While slippages declined QoQ to Rs 22.3bn, stressed assets remained elevated at 13.6%. CBK had in-principal approval to restructure accounts worth Rs 25bn under S4A; outstanding loans under SDR/5:25 stood at Rs 75bn/Rs 63bn as of Q3. Loan growth remained flattish YoY. We pare FY17E-FY19E earnings by 5-9% to factor in lower loan growth and elevated provisions. Maintain SELL with a Mar’18 TP of Rs 200.
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