Central Bank - 1QFY2014 Result Update

7/27/2019 Central Bank - 1QFY2014 Result Update

1/10

Please refer to important disclosures at the end of this report 1

Particulars (` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy)NII 1,538 1,534 0.2 1,378 11.6Pre-prov. profit 1,001 784 27.5 793 26.2

PAT 22 169 (87.0) 336 (93.5)Source: Company, Angel Research

Central Bank reported a weak set of numbers for the quarter. NII grewmoderately by 11.6% yoy. Other income, propelled by treasury gains, grew at85.5% yoy, thereby aiding healthy operating profit growth of 26.2% yoy. On theasset quality front, the slippages during the quarter spiked to 5.6%, highest sincethe bank made switchover to system based NPA recognition. Gross and Net NPA

levels jumped up sequentially by 24.5% and 30.9%, respectively, on an alreadylarge base. Consequently, the provisioning expenses almost tripled yoy, therebyresulting in a net profit of `22cr for the quarter as against `336cr in 1QFY2013.

Moderate business growth; Asset quality pressures increase: During 1QFY2014,the banks advances grew at a moderate pace of 13.2% yoy. Deposits grew at ahealthy pace of 17.2% yoy, even as the bank reduced its share of bulk depositsand CDs as a proportion of overall deposits to 22.6% from 24.4% in last quarter.CASA ratio came down by 74bp yoy to 32.1%. Reported NIMs remainedsequentially stable at 2.68%. Treasury income grew by 173.2% yoy to `279cr.Non-interest income (excluding treasury) grew strongly at 44.7% yoy, aided byhigher recoveries from written-off accounts, which almost doubled on a yoy basisand profit from exchange transactions at `46cr compared to a loss of `17cr in1QFY2013. Asset quality deteriorated further showing no signs of respite, as the

bank witnessed slippages of `2,400cr during the quarter (which included achunky account in Gems and Jewelry sector worth `968cr). Even on the recoveriesand upgrades front, the bank reported a sequentially lower performance at`294cr as against `1,165cr reported in 4QFY2013. PCR dropped by 529bp qoq,and now stands at 42.5%. The bank restructured loans worth `3,000cr during thequarter, thereby taking its outstanding restructured book to `25,794cr (which, at14.8% of net advances, remains one of the highest in the industry).

Outlook and valuation:Over the last two years, the bank has faced tremendousasset quality pain, as its Gross NPA ratio has increased from 2.3% to 6.0% andshare of total restructured advances to net advances has increased from 4.4% to14.8%. Traditionally the bank has witnessed higher asset quality pressure fromthe infrastructure sector (including power), but now, given the weak economicenvironment, other stressed sectors/over-leveraged companies are alsocontributing to the asset quality pain. At the CMP, the stock is trading at 0.6xFY2015E ABV. Even though the bank is looking cheap at CMP, the asset qualityconcerns outweigh current valuations, in our view, especially considering theweakening macro environment. Hence, we maintain our Neutral rating on it.Key financials (Standalone)Y/E March (` cr) FY2012 FY2013 FY2014E FY2015ENII 5,169 5,738 6,460 7,355% chg (2.9) 11.0 12.6 13.9

Net profit 533 1,015 784 1,806% chg (57.4) 90.4 (22.8) 130.4

NIM (%) 2.5 2.4 2.4 2.4

EPS (`) 5.2 8.1 6.1 15.8P/E (x) 11.8 7.7 10.2 3.9

P/ABV (x) 0.7 0.7 0.7 0.6

RoA (%) 0.2 0.3 0.2 0.5

RoE (%) 5.4 8.1 5.2 12.8

Source: Company, Angel Research

NEUTRALCMP `62

Target Price -

Investment Period -

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 85.3

MF / Banks / Indian Fls 7.7

FII / NRIs / OCBs 1.7

Indian Public / Others 5.3

Abs. (%) 3m 1yr 3yr

Sensex 4.8 18.8 10.8

CBOI (11.0) (18.2) (53.8)

Reuters Code CBI.BO

CBOI@IN

BSE Sensex 20,091

Nifty 5,991

Avg. Daily Volume 110,283

Face Value (`) 10

Beta 1.2

52 Week High / Low 96/56

Banking

Market Cap (`cr) 6,482

Vaibhav Agrawal022 3935 7800 Ext: 6808

[email protected]

Sourabh Taparia022 3935 7800 Ext: 6872

[email protected]

Harshal Patkar022 3935 7800 Ext: 6847

[email protected]

Central Bank of IndiaPerformance Highlights

1QFY2014 Result Update | Banking

July 25, 2013


2/10

Central Bank of India | 1QFY2014 Result Update

July 25, 2013 2

Exhibit 1:1QFY2014 performance (Standalone)Particulars (` cr) 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy) FY2013 FY2012 % chg (yoy)Interest earned 5,846 5,768 1.4 5,303 10.2 21,861 19,150 14.2- on Advances / Bills 4,576 4,374 4.6 4,168 9.8 16,923 14,420 17.4- on investments 1,258 1,283 (2.0) 1,123 12.0 4,779 4,347 9.9

- on balance with RBI & others 10 41 (76.1) 1 1,250.7 79 12 578.4

- on others 2 69 (97.0) 11 (80.9) 81 370 (78.2)

Interest Expended 4,308 4,233 1.8 3,925 9.7 16,123 13,981 15.3Net Interest Income 1,538 1,534 0.2 1,378 11.6 5,738 5,169 11.0Other income 598 636 (6.0) 322 85.5 1,667 1,396 19.5Other income excl. treasury 319 493 (35.3) 220 44.7 1,284 1,076 19.4

- Fee Income 178 253 (29.6) 173 2.9 816 664 22.9

- Treasury Income 279 143 95.1 102 173.5 383 320 19.7

- Recov. from written off a/cs 55 136 (59.6) 28 96.4 282 148 90.5

- Others 86 104 (17.5) 19 343.8 186 264 (29.3)

Operating income 2,136 2,170 (1.6) 1,700 25.6 7,405 6,564 12.8Operating expenses 1,135 1,386 (18.1) 907 25.1 4,232 3,749 12.9- Employee expenses 801 965 (17.0) 641 24.9 2,892 2,506 15.4

- Other Opex 335 421 (20.5) 266 25.7 1,341 1,243 7.9

Pre-provision Profit 1,001 784 27.5 793 26.2 3,173 2,815 12.7Provisions & Contingencies 983 445 120.9 353 178.6 1,853 2,169 (14.6)- Provisions for NPAs 825 423 95.0 382 116.0 1,930 1,990 (3.0)

- Provisions for Investments 170 (49) (446.9) (39) (535.9) (164) 154 (206.5)

- Other Provisions (12) 71 (116.5) 10 (218.1) 87 25 252.7

PBT 17 339 (94.9) 440 (96.1) 1,320 647 104.1Provision for Tax (5) 170 - 104 - 305 113 169.0

PAT 22 169 (87.0) 336 (93.5) 1,015 533 90.3Effective Tax Rate (%) - 50.2 - 23.6 - 23.1 17.5 558bp


Exhibit 2:1QFY2014 Actual vs Angel estimatesParticulars (` cr) Actual Estimates Variation (%)NII 1,538 1,621 (5.1)

Non-Interest Income 598 384 55.8

Operating Income 2,136 2,005 6.5Operating Expenses 1,135 1,056 7.5

Pre-Prov. Profit 1,001 949 5.4Provisions & Cont. 983 345 185.3

PBT 17 605 (97.1)Prov. for Taxes -5 157 (102.9)

PAT 22 447 (95.1)Source: Company, Angel Research


3/10


July 25, 2013 3

Exhibit 3:1QFY2014 performance analysis (Standalone)Particulars 1QFY14 4QFY13 % chg (qoq) 1QFY13 % chg (yoy)Balance sheetAdvances (` cr) 174,623 171,936 1.6 154,244 13.2Deposits (` cr) 230,760 226,038 2.1 196,977 17.2

Credit-to-Deposit Ratio (%) 75.7 76.1 (39)bp 78.3 (263)bp

Current deposits (` cr) 12,910 14,491 (10.9) 10,837 19.1

Saving deposits (` cr) 61,264 59,090 3.7 53,943 13.6

CASA deposits (` cr) 74,174 73,581 0.8 64,780 14.5

CASA ratio (%) 32.1 32.6 (41)bp 32.9 (74)bp

CAR (%) 11.4 11.5 (6)bp 11.6 (15)bp

Tier 1 CAR (%) 8.1 8.1 5bp 7.4 76bp

Profitability Ratios (%)Cost of deposits 7.3 7.4 (11)bp 7.5 (19)bp

Yield on advances 10.9 11.1 (23)bp 11.2 (30)bp

Yield on investments 8.4 8.1 31bp 7.6 82bp

Reported NIM 2.7 2.7 0bp 2.6 4bp

Cost-to-income ratio 53.2 63.9 (1070)bp 53.4 (21)bp

Asset qualityGross NPAs (` cr) 10,529 8,456 24.5 7,510 40.2

Gross NPAs (%) 6.0 4.8 123bp 4.9 116bp

Net NPAs (` cr) 6,527 4,988 30.9 4,853 34.5

Net NPAs (%) 3.9 2.9 96bp 3.2 64bp

Provision Coverage Ratio (%) 42.5 47.8 (529)bp 40.8 170bp

Slippage ratio (%) 5.6 1.9 368bp 3.9 166bp

Credit cost (%) 1.2 0.6 59bp 0.7 57bp


Business growth moderate; NIMs stable qoq

During 1QFY2014, the banks advances grew at a moderate pace of 13.2% yoy.

Deposits grew at a healthy pace of 17.2% yoy, even as the bank reduced its high

cost bulk deposits (share of bulk deposits and CDs as a proportion of overall

deposits came in at 22.6% compared to 31.3% a year ago and 24.4% in the last

quarter). Growth in savings deposits was moderate at 13.6% yoy, while current

account deposits grew by 19.1% on a yoy basis. The CASA ratio came down by

74bp yoy and 41bp qoq to 32.1%. Going forward, the Management has guided

for an advances growth in agri, retail and SME segments at ~20%.

The reported NIM for the bank remained stable sequentially at 2.68%. Yield on

advances for the bank declined by 23bp qoq on increased interest reversals on

higher slippages during the quarter. Yield on investments improved sequentially by

31bp to 8.4%. Cost of funds for the bank reduced sequentially by 15bp to come in

at 7.4%.


4/10


July 25, 2013 4

Exhibit 4:Business growth moderate


Exhibit 5:CASA deposits ratio reduces


Exhibit 6:CoF lower sequentiallyby 15bp


Exhibit 7:NIM stable at 2.68%


Strong growth in non-interest income (excluding treasury)

Growth in the banks non-interest income (excluding treasury) was strong at 44.7%

yoy, aided by higher recoveries which almost doubled on a yoy basis and profit

from exchange transactions at `46cr compared to a loss of `17cr in 1QFY2013.

Recoveries from written off accounts came in `55cr vis--vis `28cr in 1QFY2013.

Treasury income for the bank increased by 173.5% yoy to `279cr. Overall, the

bank registered a stellar 85.5% yoy growth on the other income front at `598cr.

Asset quality deteriorates significantly

The banks asset quality deteriorated significantly during the quarter, as the bank

witnessed slippages amounting to `2,400cr, highest since the bank made a

switchover to system based NPA recognition. Of the slippages during the quarter,

`956cr came from a single account in the Gems and Jewelry sector. Annualized

slippages ratio for the quarter came in at 5.6%, much higher than 1.9% in 4QFY2013

and 3.3% in 3QFY2013. Even on the recoveries and upgrades front, the bank

reported a sequentially lower performance at `294cr as against `1,165cr reported in

4QFY2013 and `728cr in 3QFY2013. Consequently, the gross and net NPA levels

for the bank increased sequentially by 24.5% and 30.9%, respectively.

Even though the bank made substantial provisions for the quarter (provisioning

expenses almost tripled on a yoy basis), the PCR (including technical write-offs)

22

.4

17

.0

18

.9

16

.6

13

.2

6.0

8.1

12

.7

15

.2

17

.2

78.3

73.7

74.7

76.175.7

71.0

72.0

73.0

74.0

75.0

76.0

77.078.0

79.0

-

10.0

20.0

30.0

1QFY13 2QFY13 3QFY13 4QFY13 1QFY14

Adv. yoy chg (%) Dep. yoy chg (%) CDR (%, RHS)

32

.9

33

.0

32

.0

32

.6

32

.1

7.0

8.7

11.3 12.7

14.5

-

2.0

4.0

6.0

8.0

10.0

12.014.0

16.0

27.0

27.8

28.6

29.4

30.2

31.0

31.832.6

33.4


CASA ratio (%) CASA yoy growth (%, RHS)

7.61

7.44

7.527.50

7.35

7.20

7.25

7.30

7.35

7.40

7.45

7.50

7.55

7.60

7.65


2.64 2.68 2.64 2.68 2.68

1.50

2.00

2.50

3.00


(%)


5/10


July 25, 2013 5

dropped by 529bp qoq, and now stands at 42.5%. Gross & Net NPA ratios

increased by 123bp and 96bp coming at 6.0% and 3.9% respectively. Out of the

total gross NPAs worth `10,529cr, nearly 73% are from accounts worth more than

`1cr (214 accounts). The bank restructured loans worth ~

`3,000cr during the

quarter, thereby taking its outstanding restructured book to `25,794cr and

standard restructured advances to `23,090cr (which at 13.2% of net advances

remains one of the highest in the industry).

Exhibit 8:Steep rise in slippages


Exhibit 9:Asset qualitypressures mount

Source: Company, Angel Research; Note: PCR including tech. write-offs

Investment concerns

Low branch productivity and structurally higher opex structure

The bank suffers from low branch and employee productivity in terms of business

per branch as well as business per employee. Business per branch for FY2013 was

lower than most peer banks. Due to this, the bank suffers from higher operating

expenses, as reflected in opex-to-average assets ratio of 2.1% in FY2013.

Outlook and valuation

Over the last two years, the bank has faced tremendous asset quality pain, as its

Gross NPA ratio has increased from 2.3% to 6.0% and share of total restructured

advances to net advances has increased from 4.4% to 14.8%. Traditionally the

bank has witnessed higher asset quality pressure from the infrastructure sector

(including power), but now, given the weak economic environment, other stressed

sectors/over-leveraged companies are also contributing to the asset quality pain.

At the CMP, the stock is trading at 0.6x FY2015E ABV. Even though the bank is

looking cheap at CMP, the asset quality concerns outweigh current valuations, in

our view, especially considering the weakening macro environment. Hence, wemaintain our Neutral rating on it.

3.9

4.8

3.3

1.9

6.5

0.7

0.8

1.0

0.6

1.2

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0


S lippages (%) Credit cos t (%, RHS)

4.9

5.5

5.6

4.8

6.0

3.2

3.8

3.8

2.9

3.9

40.8 39.941.2

47.8

42.5

34.0

36.0

38.0

40.042.0

44.0

46.0

48.0

50.0

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0


Gross NPAs (%) Net NPAs (%) PCR (%, RHS)


6/10


July 25, 2013 6

Exhibit 10:Key assumptionsParticulars (%) Earlier estimates Revised estimatesFY2014E FY2015E FY2014E FY2015ECredit growth 14.0 14.0 13.0 13.0Deposit growth 13.0 13.0 13.0 13.0

CASA ratio 31.7 31.8 31.7 31.8

NIMs 2.5 2.5 2.4 2.4

Other income growth (2.0) 12.2 4.1 6.4

Growth in staff expenses 7.5 7.5 12.5 5.0

Growth in other expenses 5.0 5.0 7.5 2.5

Slippages 2.8 2.5 3.8 2.5

Source: Angel Research

Exhibit 11:Change in estimatesParticulars (` cr) FY2014E FY2015EEarlierestimates Revisedestimates Var. (%) Earlierestimates Revisedestimates Var. (%)NII 6,773 6,460 (4.6) 7,713 7,355 (4.6)

Non-interest income 1,633 1,735 6.2 1,833 1,847 0.8

Operating income 8,406 8,196 (2.5) 9,546 9,202 (3.6)Operating expenses 4,516 4,695 3.9 4,820 4,893 1.5

Pre-prov. profit 3,890 3,501 (10.0) 4,726 4,309 (8.8)Provisions & cont. 1,914 2,496 30.4 1,535 1,573 2.5

PBT 1,975 1,005 (49.1) 3,192 2,736 (14.3)Prov. for taxes 514 221 (57.0) 1,085 930 (14.3)

PAT 1,462 784 (46.4) 2,107 1,806 (14.3)Source: Angel Research

Exhibit 12:P/ABV band


0

50

100

150

200

250

Sep-0

7

Fe

b-0

8

Jul-08

Dec-0

8

May-0

9

Oc

t-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Fe

b-1

3

Jul-13

Dec-1

3

Price (`) 0.3x 0.6x 0.9x 1.2x 1.5x


7/10


July 25, 2013 7

Exhibit 13:Recommendation summaryCompany Reco. CMP(`) Tgt. price(`) Upside(%) FY2015EP/ABV (x) FY2015ETgt. P/ABV (x) FY2015EP/E (x) FY2013-15EEPS CAGR (%) FY2015ERoA (%) FY2015ERoE (%)AxisBk Buy 1,123 1,348 20 1.2 1.5 7.1 19.1 1.6 18.1

FedBk Neutral 349 - - 0.8 - 6.7 2.9 1.0 12.3

HDFCBk Accumulate 660 745 13 3.1 3.5 14.6 26.3 1.9 22.8

ICICIBk* Buy 953 1,160 22 1.4 1.7 9.6 17.4 1.6 16.2

SIB Neutral 22 - - 0.8 - 5.3 5.7 0.9 16.2

YesBk Neutral 383 - - 1.6 - 7.7 16.9 1.3 22.8

AllBk Neutral 81 - - 0.4 - 2.4 18.3 0.7 13.6

AndhBk Neutral 77 - - 0.5 - 3.4 (0.3) 0.7 13.2

BOB Accumulate 590 666 13 0.6 0.7 4.1 16.8 0.9 16.0

BOI Neutral 197 - - 0.4 - 2.9 21.6 0.7 15.1

BOM Neutral 48 - - 0.5 - 3.7 10.0 0.6 15.3

CanBk Neutral 298 - - 0.5 - 3.4 15.4 0.8 14.2CentBk Neutral 62 - - 0.5 - 3.3 52.3 0.6 14.3CorpBk Neutral 313 - - 0.4 - 3.0 5.7 0.7 14.2

DenaBk Neutral 64 - - 0.4 - 2.6 3.7 0.7 14.7

IDBI# Neutral 71 - - 0.4 - 3.2 25.1 0.8 13.3

IndBk Neutral 104 - - 0.4 - 2.5 7.0 0.9 14.7

IOB Neutral 47 - - 0.3 - 2.4 78.9 0.6 13.0

J&KBk Neutral 1,211 - - 0.9 - 5.8 (1.7) 1.2 16.8

OBC Neutral 164 - - 0.3 - 2.6 17.0 0.8 12.9

PNB Accumulate 631 718 14 0.6 0.7 3.6 14.5 1.1 16.5

SBI* Buy 1,803 2,077 15 1.0 1.2 6.3 17.5 1.0 17.0

SynBk Neutral 107 - - 0.5 - 3.9 (8.5) 0.6 14.6

UcoBk Neutral 65 - - 0.7 - 4.2 67.5 0.6 13.6

UnionBk Accumulate 147 162 11 0.5 0.5 3.1 14.7 0.7 15.2

UtdBk Neutral 45 - - 0.3 - 2.2 54.6 0.6 14.7

VijBk Neutral 43 - - 0.5 - 4.0 9.5 0.4 11.5

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF

Company Background

Central Bank of India is a mid-sized PSU bank, with a balance sheet size of~`2.7lakh cr. The bank has one of the largest branch networks of 4,887

branches, which are well spread across several major states of India. The bank

also has the second highest proportion of branches among PSUs and has good

rural and semi-urban presence (accounting for ~64% of total branches). In the

past, the bank's focus on low-yielding bulk corporate loans was contributing to

lower profitability, but slowly the bank is trying to increase its retail lending (still low

at about13.33% of loans).


8/10


July 25, 2013 8

Income statement

Y/E March (` cr) FY10 FY11 FY12 FY13 FY14E FY15ENet Interest Income 2,545 5,325 5,169 5,738 6,460 7,355- YoY Growth (%) 14.2 109.2 (2.9) 11.0 12.6 13.9Other Income 1,735 1,265 1,395 1,667 1,735 1,847- YoY Growth (%) 62.2 (27.1) 10.3 19.5 4.1 6.4

Operating Income 4,281 6,590 6,564 7,405 8,196 9,202- YoY Growth (%) 29.8 54.0 (0.4) 12.8 10.7 12.3

Operating Expenses 2,222 3,999 3,749 4,233 4,695 4,893- YoY Growth (%) 19.4 80.0 (6.3) 12.9 10.9 4.2

Pre - Provision Profit 2,059 2,591 2,815 3,173 3,501 4,309- YoY Growth (%) 43.3 25.9 8.6 12.7 10.4 23.1

Prov. & Cont. 509 932 2,169 1,853 2,496 1,573- YoY Growth (%) (0.5) 83.2 132.6 (14.6) 34.7 (37.0)

Profit Before Tax 1,550 1,659 646 1,320 1,005 2,736- YoY Growth (%) 67.5 7.1 (61.0) 104.2 (23.9) 172.3

Prov. for Taxation 491 407 113 305 221 930- as a % of PBT 31.7 24.5 17.5 23.1 22.0 34.0

PAT 1,058 1,252 533 1,015 784 1,806- YoY Growth (%) 85.3 18.3 (57.4) 90.4 (22.8) 130.4

Preference Dividend 61 131 147 172 150 150PAT avl. to Eq. Sh 998 1,121 386 843 633 1,656- YoY Growth (%) 102.1 12.4 (65.5) 118.2 (24.9) 161.4

Balance sheet

Y/E March (` cr) FY10 FY11 FY12 FY13 FY14E FY15EShare Capital 1,771 2,021 2,353 2,662 2,662 2,662

- Equity 404 404 736 1,045 1,045 1,045

- Preference 1,367 1,617 1,617 1,617 1,617 1,617

Reserve & Surplus 5,921 6,827 10,098 12,651 13,161 14,445

Deposits 162,107 179,356 196,173 226,038 255,423 288,628

- Growth (%) 23.5 10.6 9.4 15.2 13.0 13.0

Borrowings 2,751 7,283 6,814 11,700 13,128 14,757

Tier 2 Capital 4,575 5,605 6,105 6,605 6,440 6,279

Other Liab. & Prov. 5,545 8,666 8,255 8,473 10,038 11,400

Total Liabilities 182,672 209,757 229,800 268,130 300,852 338,170Cash Balances 17,012 14,082 13,114 13,560 11,494 12,988

Bank Balances 2,205 1,201 1,012 532 4,513 5,073

Investments 50,563 54,504 59,243 72,604 79,991 88,786

Advances 105,383 129,725 147,513 171,936 194,288 219,545

- Growth (%) 23.3 23.1 13.7 16.6 13.0 13.0

Fixed Assets 2,343 2,425 2,474 2,685 2,922 3,186

Other Assets 5,165 7,819 6,443 6,813 7,644 8,593

Total Assets 182,672 209,757 229,800 268,130 300,852 338,170- Growth (%) 23.7 14.8 9.6 16.7 12.2 12.4


9/10


July 25, 2013 9

Ratio analysis

Y/E March FY10 FY11 FY12 FY13 FY14E FY15EProfitability ratios (%)NIMs 1.6 2.8 2.5 2.4 2.4 2.4Cost to Income Ratio 51.9 60.7 57.1 57.2 57.3 53.2

RoA 0.6 0.6 0.2 0.3 0.2 0.5

RoE 25.4 23.2 5.4 8.1 5.2 12.8

B/S ratios (%)CASA Ratio 34.4 35.2 33.3 32.6 31.7 31.8

Credit/Deposit Ratio 65.0 72.3 75.2 76.1 76.1 76.1

CAR 12.2 11.6 12.4 11.3 9.8 9.3

- Tier I 6.8 6.3 7.8 8.0 7.3 7.1

Asset Quality (%)Gross NPAs 2.3 1.8 4.8 4.8 6.1 5.9

Net NPAs 0.7 0.7 3.1 2.9 3.5 3.1

Slippages 1.2 1.3 5.2 3.4 3.8 2.5

Loan Loss Prov. /Avg. Assets 0.2 0.3 0.9 0.5 0.6 0.4

Provision Coverage Ratio 70.4 67.6 40.6 47.8 47.5 52.5

Per Share Data (`)EPS 24.7 27.7 5.2 8.1 6.1 15.8

ABVPS (75% cover.) 105.2 126.4 85.6 88.5 84.1 99.9

DPS 2.2 3.4 2.0 2.5 1.0 3.0

Valuation RatiosPER (x) 2.5 2.2 11.8 7.7 10.2 3.9

P/ABVPS (x) 0.6 0.5 0.7 0.7 0.7 0.6

Dividend Yield 3.5 5.5 3.2 4.0 1.6 4.8

DuPont AnalysisNII 1.5 2.7 2.4 2.3 2.3 2.3

(-) Prov. Exp. 0.3 0.5 1.0 0.7 0.9 0.5

Adj. NII 1.2 2.2 1.4 1.6 1.4 1.8

Treasury 0.5 0.2 0.1 0.2 0.1 0.1

Int. Sens. Inc. 1.7 2.4 1.5 1.7 1.5 1.9

Other Inc. 0.6 0.5 0.5 0.5 0.5 0.5

Op. Inc. 2.3 2.9 2.0 2.2 2.0 2.4

Opex 1.3 2.0 1.7 1.7 1.7 1.5PBT 0.9 0.8 0.3 0.5 0.4 0.9

Taxes 0.3 0.2 0.1 0.1 0.1 0.3

RoA 0.6 0.6 0.2 0.4 0.3 0.6Pref. Div. 0.0 0.1 0.1 0.1 0.1 0.0

RoA post Pref Div 0.6 0.6 0.2 0.3 0.2 0.5Leverage 42.1 40.6 30.9 24.0 23.5 24.6

RoE 25.4 23.2 5.4 8.1 5.2 12.8


10/10


July 25, 2013 10

3QFY2012 Result Update | Banking

February 1, 2012

Central Bank of IndiaPerformance Highlights

Particulars (` cr) 4QFY12 3QFY12 % chg (qoq) 3QFY11 % chg (yoy)NII 1,179 1,396 (15.6) 1,432 (17.7)Pre-prov. profit 614 797 (22.9) 815 (24.7)

PAT 113 244 (53.6) 404 (71.9)Source: Company, Angel Research

For 3QFY2012, Central Bank of India reported disappointing results with a53.6% qoq and 71.9% yoy dip in its net profit, due to disappointing operatingperformance as well as higher provisioning expenses. Even the sluggish PATwas aided by reversal of earlier years tax provision of `112cr. Disappointmenton the asset-quality front continued with elevated slippages and ballooningrestructuring. We recommend Reduce on the stock.NIM dips; Asset quality remains under stress: The banks business growth wasmoderate during 3QFY2012, with advances growing by 4.0% qoq (up 14.6% yoy)and deposits almost flat sequentially (up 15.4% yoy). Overall CASA deposit growth

was rather slow at 7.3% yoy, leading to a sharp 244bp yoy fall in CASA ratio to

32.5%. The banks reported NIM fell by a rather steep 47bp qoq to 2.53% on the

back of a 15bp qoq fall in yield on advances and a 9bp rise in cost of deposits.

The bank had to reverse interest income of `110cr on NPAs recognized on

switchover to the system-based NPA recognition platform, which partly

exacerbated the fall in NIM. Asset quality deteriorated during 3QFY2012 as well,

with gross NPA ratio rising to 3.7% (2.9% in 3QFY12) and net NPA ratio climbing

to over 2.0% (1.4% in 3QFY12). Slippages for 3QFY2012 stood at a steep

`1,464cr (annualized slippage ratio of 4.5%) compared to an average quarterly

run-rate of `540cr over the past six quarters. A late starter in CBS implementation,

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

DISCLAIMERThis document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investmentdecision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document shouldmake such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of thecompanies referred to in this document (including the merits and risks involved), and should consult their own advisors to determinethe merits and risks of such an investment.

Angel Broking Pvt. Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, makeinvestment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in thisdocument are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions andtrading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company'sfundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any wayresponsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannottestify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.While Angel Broking Pvt. Limited endeavours to update on a reasonable basis the information discussed in this material, there may beregulatory, compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,redistributed or passed on, directly or indirectly.

Angel Broking Pvt. Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment bankingor other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report orin the past.

Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise fromor in connection with the use of this information.

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to thelatest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates mayhave investment positions in the stocks recommended in this report.

Disclosure of Interest Statement Central Bank of India

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors

Documents

Central Bank - 1QFY2014 Result Update