City Union Bank Ltd. share price target

Background: City Union Bank (CUB) among the smaller-sized banks in the private sector space operates a network of 525 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...

City Union Bank?s (CUB) strong core earnings growth (21%) in 3QFY16 was driven by NIM expansion (3.8%, 34bps) and pick-up in loan growth (14%). Steady non-interest income drove the healthy 23% growth in PPoP. However, higher LLP (2x YoY) restricted PAT growth to a mere 10% YoY. Stress accretion rose to 4% (slippages 2.7% ann. plus Rs 650mn of restructuring), but fell within guidance.

Background: City Union Bank (CUB) among the smaller-sized banks in the private sector space operates a network of 491 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...

City Union Bank (CUB) is a private bank with a strong SME lending franchise, particularly in Tamil Nadu. The economic slowdown affected CUB in the form of single-digit growth and GNPLs ( 84bps to 1.86%) over FY12-15. Its branch expansion (from 300 to 475) seemed ill-timed as C/I rose over ~500bps to 45.1%.

Background: City Union Bank (CUB) among the smaller-sized banks in the private sector space operates a network of 485 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...

CUB's Q2FY16 results were in- line with estimates as the earnings grew by 15% YoY (-3.3% QoQ) to Rs 1,079 mn led by strong growth in NII however higher tax rate impacted earnings growth. NII grew by 16.4% YoY (7.4% QoQ) led by higher NIMs of 3.74% whereas advances growth stood at 12.1% YoY (4.9% QoQ). Asset quality deteriorated as GNPA and NNPA increased by 10 bps and 4 bps to 2.1% and 1.36% respectively.

CUB's Q1FY16 results were above estimates as the earnings grew by 12.2% YoY (12.6% QoQ) to Rs 1,116 mn led by strong growth in NII, lower employee and provision expenses. NII grew by 19.8% YoY (9.3% QoQ) led by higher NIMs of 3.59% whereas advances growth stood at 10.8% YoY (-1% QoQ). Asset quality deteriorated as GNPA increased by 10 bps to 2% whereas NNPA remained stable at 1.32%. Slippages were lower at Rs 780 mn vs Rs 1.1 bn in Q4FY15.

Background: City Union Bank (CUB) among the smaller-sized banks in the private sector space operates a network of 475 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...