City Union Bank Ltd. share price target

All round positive quarter

City Union Bank (CUB) has demonstrated consistency in profitability by focusing on risk at a time when most of its peers were looking for scale. Over the last ten decades, CUB leveraged its trust and relationship with SME in its circle of competence by ring fencing the risk. In our view CUB...

We maintain our BUY recommendation with a target price of Rs 195/share (2.2x FY23E ABV).

Beat on operational front due to lower credit cost

City Union Bank Ltd (CUB), the oldest private sector bank in India, is a mid-sized commercial bank headquartered in Tamil Nadu, having a network of 702 branches and 1,724 ATMs spread across the country and a loan book size of Rs.37,021cr Total Business grew by 8% YoY with advances growing at 7% supported by strong growth in ECLGS (Emergency Credit Line Guarantee Scheme) and Gold Loan. Net Interest Income grew by 2% YoY while declined 12.4% QoQ...

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...

We maintain a positive outlook on the stock with a BUY rating and arrive at a target price of Rs 210/share (2.4x FY23 ABV), implying an upside of 21% .

A muted quarter

City Union Bank (CUB) reported 4QFY21 earnings in line with our expectations and the key pointers are a) relatively healthy business growth with net advance and deposit growth of 0.7% QoQ and 2.9% QoQ respectively, b) sequentially higher C/I ratio of 50.1% v/s 38.9% in 4QFY21...

City Union Bank has registered a healthy quarterly result on all fronts with strong beat on profitability at 1.7bn driven by healthy NIMs, higher non-interest income and lower provisions. In 3QFY21, the bank has made Covid provision of 1.25bn translating in the total contingent buffer of 4.7bn (~1.3% of loan book), which we believe is reasonable. In 3QFY21, the pro-forma NNPA stood 3.4%, while restructuring book stood at 8.1bn (~2.2% of loan book). The management expects the restructuring book to be at ~5% in 4QFY21. Factoring the management guidance for slippages (~3.5% in FY21) and cost to income ratio (~43% in FY21), we estimate a ROA of ~1.1% in FY21. Furthermore, we estimate ROA improvement gradually to ~1.5% by FY23E. We recommend...