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Merger Overhang Remains A Key Concern; Maintain HOLD Bank of Baroda (BoB) has delivered a strong performance on asset quality front in 2QFY19, marked low fresh slippage of Rs22.8bn for seventh successive quarter. It's PCR including technically written-off accounts sequentially improved to 70.75%, which excluding technically written-off accounts stood at 61.79% in 2QFY19 vs. 69.11% and 59.94% in 1QFY19. The Bank's NII grew by 20.8% in 2QFY19 led by strong growth in loan book and relatively stable NIMs of 2.61%. Further, its core fee-based income remained strong ((+14.3% YoY and +12.3% QoQ) at Rs9.6bn. Domestic credit grew by 20.4% led by retail loans, which grew by 33.6% YoY. Within retail loans,...
Union Bank of India Q2FY19 results Comment NII fell to Rs. 2493.12 Cr in Q2FY19 compared to Rs. 2626.12 Cr in Q1FY19. NII rose by 7.43% ( Rs. 172.39 Cr ) when compared with the same period last year
18 September 2018 The government has chosen the three banks for the merger as they fit well into the strategy of Anchor Bank (Bank of Baroda) + Good Bank (Vijaya Bank) + Stressed Bank (Dena Bank). While both BOB and Vijaya Bank have reported an improvement in their earnings performance, Dena Bank is under the RBIs Prompt Corrective Action (PCA) framework and has been restrained from further lending. Dena Bank has a GNPA/NNPA ratio of 22.7%/11.0%, while Vijaya Bank has a significantly lower GNPA/NNPA ratio of 6.2%/4.1%. This compares with the 12.5%/5.4% GNPA/NNPA ratio for BOB. The merger of BOB, Vijaya Bank and Dena Bank will create the third largest lender in the country with an advances and deposits market share of 7.0% and 7.3%, respectively. While BOB already has a wide-spread network, Dena Bank and Vijaya Bank are more regional focused banks.
SBI's asset quality improved on the back of moderation in fresh slippages and resolution of two NCLT cases (Bhushan Steel and Electrosteel Steels). While slippages moderated to 3.0% as compared to 7.0% QoQ and 6.5% YoY, recoveries jumped 3x QoQ. Consequently, Gross nonperforming asset (NPA) ratio dipped by 22 bps QoQ to 10.7%. Net NPA ratio declined at a faster pace of 44 bps QoQ to 5.3% as the bank improved its provision coverage ratio (PCR) by 308 bps QoQ to 69.3%. SBI disclosed a watch-list of Rs24,600cr which will be a potential source of incremental slippages from the corporate book. We project slippages of 3.0% in FY19E and expect it to decline to 2.0% by FY20E. As a result, Gross/Net NPA ratios will moderate to 8.0%/4.1% by FY20E. Further, SBI holds provision buffer of 71% on total outstanding of Rs63,000cr in NCLT...
BOB's asset quality improved significantly as fresh slippages declined by 76% QoQ and 35% YoY. Notably, 85% of the slippages during the quarter were from the watchlist. While Gross nonperforming asset (NPA) ratio increased by 20 bps QoQ to 12.5%, Net NPA ratio declined by 9 bps QoQ to 5.4% as the bank improved its provision coverage ratio (PCR) by 190 bps QoQ to 69.1%. Notably, the watchlist of the bank now stands at Rs8,600cr (2.0% of the advances). Further, the bank has an exposure of Rs5,813cr and Rs3,843cr towards large NCLT accounts referred by RBI (List 1 + List 2) and has made provisions of 64.4% and 62.7%, respectively. We believe that a substantial proportion of the pain has been recognised. Hence, slippages are expected to moderate...
losses and instead provided it in one quarter. The bank has posted strong growth in the net interest income, while showing improvement in NIM to eight quarter high level in Q1FY2019. The bank has improved the asset quality in...
ICICI Securities Ltd | Retail Equity Research SBI reported a loss of | 48.7 billion, led by higher provision from investment depreciation, higher wage opex and NPA provisions Gross slippages remained elevated at | 14349 crore vs. | 33670 crore, higher than expected. Out of this, corporate slippages were | 3704 crore (| 3386 crore from watchlist). About | 9984 crore was fresh slippages. Depicting a recovery from steel accounts in NCLT 1 of | 15000 crore, GNPA ratio declined 22 bps QoQ to 10.69% while NNPA...
Maintain BUY with SOTP of Rs 340 (1.3x Mar-20E core ABV of Rs 170 + Rs 119 subs value). Though SBIN reported a 3rd consecutive quarterly loss, the improvement in business metrics was heartening. NII (+9% QoQ) was ahead of estimates as NIMs saw a sharp uptick (2.80%, up 30bps). Asset quality actually improved (G/NNPAs down ~5/11% QoQ) as stress accretion eased (slippages at ~3% ann. vs. ~7% QoQ) and 2 NCLT resolutions materialized. Despite the humongous base of 44%+, sequential SA growth of 3% indicates strong liability franchise. The 3% sequential dip in loan book was seasonal.
