Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
2Activity
0 of .
Results for:
No results containing your search query
P. 1
Syndicate Bank

Syndicate Bank

Ratings: (0)|Views: 137 |Likes:
Published by Angel Broking

More info:

Categories:Business/Law, Finance
Published by: Angel Broking on Aug 08, 2011
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

08/08/2011

pdf

text

original

 
 
Please refer to important disclosures at the end of this report
 1 
Particulars (
`
cr) 1QFY12 4QFY11
% chg (qoq)
1QFY11
% chg (yoy)
NII 1,110 1,161
(4.4)
964
15.2
Pre-prov. profit 743 672
10.5
587
 26.5
PAT 343 289
18.5
265
29.2
 Source: Company, Angel Research
For 1QFY2012, Syndicate Bank reported a strong set of numbers, with net profitincreasing by robust 18.5% qoq (up by 29.2% yoy), in-line with our estimates. A significant decline in slippages and a marginal improvement in CASA ratio werethe key positives of the result.
We recommend an Accumulate rating on the stock.
 
Healthy business growth with stable asset quality:
The bank’s advances grew by 2.0% qoq (up 15.8% yoy) to
 ` 
108,928cr, while deposits declined by 2.0% qoq (upby strong 22.4% yoy) to
 ` 
132,889cr. CASA deposits declined sequentially by 1.4%qoq to
 ` 
41,346cr, primarily due to an 8.4% qoq decrease in current accountdeposits. The effect of rising interest rates was felt in 1QFY2012, with cost ofdeposits increasing by 56bp to 6.4%. Reported NIM witnessed a decline of 27bpqoq to 3.2%, partly compensated by the 34bp qoq rise in yield on advancesto 10.2%. For 1QFY2012, CEB income grew by 28.7% yoy to
 ` 
130cr, whiletreasury income witnessed a robust increase of 190.0% yoy to
 ` 
58cr. Slippagesdeclined considerably to
 ` 
350cr during 1QFY2012 (slippage ratio of 1.3%)compared to
 ` 
542cr in 4QFY2011 (slippage ratio of 2.4%). NPA ratio was stablesequentially, with gross NPA ratio at 2.4% (2.4% in 4QFY2011) and net NPA ratioat 0.9% (1.0% in 4QFY2011). Until now, the bank has only switched over accountsworth
 ` 
25lakh and above to system-based NPA recognition.
Outlook and valuation:
At the CMP, the stock is trading at 0.8x FY2013E ABV compared to its five-year range of 0.7x–1.3x one-year forward ABV with a medianof 0.94x. Keeping in mind the bank’s stable asset quality and moderate NIM, thevaluation appears cheap relative to its peers. We value the stock at 0.9x FY2013E ABV and, hence, recommend Accumulate with a target price of
 ` 
131.
Key financials
Y/E March (
`
cr) FY2010 FY2011 FY2012E FY2013ENII 2,740 4,383 4,359 4,545
% chg 7.5 60.0 (0.5) 4.3
Net profit 813 1,048 1,007 1,236
% chg (10.9) 28.8 (3.9) 22.7
NIM (%) 2.1 3.0 2.6 2.3
EPS (
`
) 15.6 18.3 17.6 21.6
P/E (x) 7.4 6.3 6.5 5.3P/ABV (x) 1.3 1.1 0.9 0.8RoA (%) 0.6 0.7 0.6 0.6RoE (%) 16.6 17.6 14.3 15.6
 Source: Company, Angel Research
 
ACCUMULATE
CMP
 ` 
115Target Price
 ` 
131
Investment Period 12 Months
Stock InfoSector BankingMarket Cap (
 ` 
cr) 6,579Beta 1.252 Week High / Low 164/98 Avg. Daily Volume 198,759Face Value (
 ` 
) 10BSE Sensex 17,306Nifty 5,211Reuters Code SBNK.BOBloomberg Code SNDB@INShareholding Pattern (%)Promoters 69.5MF / Banks / Indian Fls 12.6FII / NRIs / OCBs 4.2Indian Public / Others 13.8 Abs. (%) 3m 1yr 3yrSensex (5.0) (4.8) 15.7Syndicate Bank 4.3 7.8 90.8
Vaibhav Agrawal
022 – 3935 7800 Ext: 6808vaibhav.agrawal@angelbroking.com
Shrinivas Bhutda
022 – 3935 7800 Ext: 6845shrinivas.bhutda@angelbroking.com
Varun Varma
022 – 3935 7800 Ext: 6847varun.varma@angelbroking.com
Syndicate Bank
Performance Highlights
1QFY2012 Result Update | Banking
 Aug 5, 2011
 
 
 
Syndicate Bank | 1QFY2012 Result Update
 
 Aug 5, 2011
 2
Exhibit 1:
 
1QFY2012 performance
Particulars (
`
cr) 1QFY12 4QFY11
% chg (qoq)
1QFY11
% chg (yoy)
Interest earned 3,399 3,162
7.5
2,604
30.5
- on Advances / Bills 2,777 2,593
7.1
2,065
34.5
- on investments 603 574
5.1
533
13.0
- on balance with RBI & others 19 -
-
7
188.0
- on others - (5)
(100.0)
-
-
Interest Expended 2,288 2,001
14.4
1,641
39.5
Net Interest Income 1,110 1,161
(4.4)
964
15.2
Other income 291 255
14.5
215
35.3
Other income excl. treasury 233 247
(5.4)
195
19.5
- Fee Income 130 160
(18.8)
101
 28.7
- Treasury Income 58 8
625.0
20
190.0
- Others 103 87
19.4
94
9.5
Operating income 1,402 1,416
(1.0)
1,179
18.9
Operating expenses 659 744
(11.4)
592
11.4
- Employee expenses 454 521
(12.8)
421
7.9
- Other Opex 205 223
(8.1)
171
 20.0
Pre-provision Profit 743 672
10.5
587
26.5
Provisions & Contingencies 327 353
(7.5)
235
39.2
- Provisions for NPAs 251 176
 42.6
144
74.3
- Provisions for Investments 38 3
-
38
-
- Other Provisions 38 174
(78.4)
53
(28.5)
PBT 416 319
30.4
353
18.0
Provision for Tax 73 30
145.9
87
(16.3)
PAT 343 289
18.5
265
29.2
Effective Tax Rate (%) 17.6 9.3
825bp
24.7
(718)bp
 Source: Company, Angel Research
Exhibit 2:
 
1QFY2012 – Actual vs. Angel estimates
Particulars (
`
cr) Actual Estimates
% chg
Net interest income 1,110 1,176
(5.6)
Non-interest income 291 241
 20.8
Operating income 1,402 1,417
(1.1)
Operating expenses 659 672
(1.9)
Pre-prov. profit 743 745
(0.4)
Provisions & cont. 327 237
38.1
PBT 416 509
(18.3)
Prov. for taxes 73 165
(55.8)
PAT 343 344
(0.3)
 Source: Company, Angel Research
 
 
Syndicate Bank | 1QFY2012 Result Update
 
 Aug 5, 2011
 3
Exhibit 3:
 
1QFY2012 performance
Particulars 1QFY12 4QFY11
% chg (qoq)
1QFY11
% chg (yoy)
Balance sheet
 Advances (
 ` 
cr) 108,928 106,782
 2.0
94,062
15.8
Deposits (
 ` 
cr) 132,889 135,596
(2.0)
108,560
 22.4
Credit-to-Deposit Ratio (%) 82.0 78.8
322bp
86.6
(468)bp
Current deposits (
 ` 
cr) 9,841 10,739
(8.4)
10,915
(9.8)
Saving deposits (
 ` 
cr) 31,505 31,207
1.0
28,154
11.9
CASA deposits (
 ` 
cr) 41,346 41,946
(1.4)
39,069
5.8
CASA ratio (%) 31.1 30.9
18bp
36.0
(488)bp
CAR (%) 12.1 13.0
(95)bp
12.4
(28)bp
Tier 1 CAR (%) 8.8 9.3
(52)bp
8.3
 47bp
Profitability Ratios (%)
Cost of deposits 6.4 5.8
56bp
5.3
109bp
Yield on advances 10.2 9.9
34bp
9.1
111bp
Reported NIM 3.2 3.4
(27)bp
3.1
7bp
Cost-to-income ratio 47.0 52.5
(551)bp
50.2
(317)bp
Asset quality
Gross NPAs (
 ` 
cr) 2,637 2,599
1.5
2,175
 21.3
Gross NPAs (%) 2.4 2.4
(1)bp
2.3
8bp
Net NPAs (
 ` 
cr) 1,018 1,031
(1.3)
985
3.3
Net NPAs (%) 0.9 1.0
(4)bp
1.1
(13)bp
Provision Coverage Ratio (%) 78.4 77.2
125bp
73.9
 457bp
Slippage ratio (%) 1.3 2.4
(109)bp
1.4
(10)bp
NPA to avg. assets (%) 0.6 0.5
17bp
0.4
 22bp
 Source: Company, Angel Research
Business remains muted; NIM declines sequentially 
During 1QFY2012, the bank’s advances grew by 2.0% qoq (up 15.8% yoy) to
 ` 
108,928cr, while deposits declined by 2.0% qoq (up a strong 22.4% yoy) to
 ` 
132,889cr. CASA deposits declined sequentially by 1.4% qoq to
 ` 
41,346cr dueto an 8.4% qoq decrease in current account deposits.The effect of rising interest rates was felt in 1QFY2012, with cost of depositsincreasing by 56bp to 6.4%. Reported NIM witnessed a decline of 27bp qoqto 3.2%, partly compensated by the 34bp qoq rise in yield on advancesto 10.2%.

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->