City Union Bank Ltd. share price target

City Union Bank Ltd (CUB), the oldest private sector bank in India, is a mid-sized commercial bank headquartered at Tamil Nadu, having a network of 700 branches and 1,793 ATMs spread across the country and a loan book size of Rs.34,536cr....

City Union Bank (CUBK) reported a better-than-expected performance (Rs 1,540mn PAT vs. Rs 953mn loss in Q4FY20) led by treasury gains, improved cost controls, stable NIM and contained provisions. Loan growth was moderate at 7% YoY,

City Union Bank Ltd (CUB), the oldest private sector bank in India, is a mid-sized commercial bank headquartered at Tamil Nadu, having a network of 700 branches and 1,793 ATMs spread across the country and a loan book size of Rs.34,576 Cr. CUB reported net loss of Rs.95 Cr on account of higher provision (Rs.450 Cr) due to elevated NPA and Covid-19 related concerns....

Background: City Union Bank (CUB) among the smaller-sized banks in the private sector space operates a network of 700 branches. With about 2/3rds of its branches located in Tamil Nadu, the bank's business is largely skewed towards the Southern India. Majority of its business comes from branches located in South India. CUB has a significant chunk of its branches in urban and semi-urban areas. With no identifiable promoters CUB is run by a team of professionals. A slew of...

City Union Bank Ltd (CUB), the oldest private sector bank in India, is a mid-sized commercial bank headquartered at Tamil Nadu, having a network of 660 branches and 1,757 ATMs spread across the country...

City Union Bank Ltd (CUB), the oldest private sector bank in India, is a mid-sized commercial bank headquartered at Tamil Nadu, having a network of 660 branches and 1,757 ATMs spread across the country and a loan book size of ~Rs33,800cr. Total business grew at 11% YoY with deposits and advances growing at 12%/10% YoY while sequential growth remained flat. CASA ratio declined to 23.35% with a 10% CASA growth on a YoY basis and 7% decline on QoQ basis....

CUBK's Q3FY20 operating performance was slightly below estimates with slower business traction and a rise in slippages. NIM improvement and higher recoveries were the silver lining. Profitability was supported by lower tax provisions.

Background: City Union Bank (CUB) among the smaller-sized banks in the private sector space operates a network of 660 branches. With about 2/3rds of its branches located in Tamil Nadu, the bank's business is largely skewed towards the Southern India. Majority of its business comes from branches located in South India. CUB has a significant chunk of its branches in urban and semi-urban areas. With no identifiable promoters CUB is run by a team of professionals. A slew of...

The bank witnessed asset quality deterioration as absolute GNPA surged 33% YoY to | 1185.4 crore. Fresh slippages continue to remain elevated at | 230 crore led by one paper account worth | 71 crore slipping into NPA (as guided). Accordingly, GNPA ratio surged 59 bps YoY to 3.5% and provision escalated to | 116 crore during the quarter. The management has guided at a slippage ratio of 1.75-2% for FY21E. With a cautious approach in MSME and agri segment, advances growth remained slower at 10.4% YoY to | 33828 crore. Commercial real estate...

CUBK's performance over FY20 so far, has been softer than anticipated on key fronts- asset quality and growth (excusable, given systemic trends). However, when we consider CUBK's track record and inherent strengths (strong credit filters, overall prudence and customer franchise) our outlook on CUBK's prospects remains unchanged. CUBKs 3QFY20 operating performance was slightly below estimates with slower business traction and a rise in slippages. NIM improvement and higher recoveries were the silver lining. Net Earnings were in line, assisted by lower tax provisions. Maintain BUY (TP Rs 262, 3x Dec-21E ABV).