City Union Bank Q4 FY21 Earnings Call Highlights | Yadnya Investment Academy

Management:

Dr N Kamakodi – managing director & chief executive officer – city union bank

Mr V Ramesh – chief financial officer – city union bank

Q4 FY21 Performance:

• Deposits recorded a growth of 9% deposits in Q4 FY21 Rs.408 Bn to Rs.445 Bn YoY
• Advances registered a growth of 7% from Rs.346 Bn to Rs.370 Bn
• Total business grown by 8% from Rs.754 Bn to Rs.816 Bn YoY
• CASA recorded 27% growth i.e., Rs.12981 Crores from Rs.10,197 Crores
• Gross Profit decreased to Rs.2,847 Mn from Rs.3,351 Mn (QoQ) and increased 11% from Rs.13,414 Mn to Rs.14,838 Mn (YoY)
• Net Profit at Rs.1,112 Mn for Q4 FY 21 from Net Loss of Rs.953 Mn in Q4 FY 20 and for YoY the Net Profit increased by 24% from Rs.4,763 Mn to Rs.5,928 Mn.
• Gross NPA – 5.11% and Net NPA – 2.97%
• Provision Coverage Ratio – 64%
• CRAR – 19.52% (Basel III) of which core CRAR – 18.45%.
• The growth in the operating profit was 11%.
• Profit after tax improved by 24% to Rs.592 Crores against Rs.476 Crores.
• Net profit increased to 24% i.e., an increase from Rs.476 Crores last year to Rs.592 Crores this year.
• Profitability and efficiency ratios: Return on Assets - 0.84%, Return on Equity - 7.85%, Net Interest Margin - 3.72%, Earning per share - Rs.1.51.
• Net Interest Margin for Q4 FY21 stands reduced to 3.72% because of reversal of interest on NPA accounts to the tune of Rs.1250 Mn for the period of 13 months from Feb 20 to March 21 subsequent to the SC verdict for the slippage of Rs.1110 0 Mn. Considering the provision made towards interest reversal during Q2 & Q3 FY 21 to tune of Rs.550 Mn, the net reversal in Q4 stands at Rs.700 Mn.

FY21 performance:

• Net Interest Income grew from Rs 16,752 Mn in FY20 to Rs 18,296 Mn in FY21, which is around 9% growth.
• Gross Profit grew from Rs 13,414 Mn in FY20 to Rs 14,838 Mn in FY21, which is around 11% growth.
• Net Profit grew from Rs 4,763 Mn in FY20 to Rs 5,928 in FY21, which is around 24% growth.
• Return on Assets grew from 1.00% in FY20 to 1.15%. in FY21.
• Return on Equity grew from 9.47% in FY20 to 10.73%. in FY21.
• Net Interest Margin in FY21 is 4.00% which is almost equal to FY20 NIM which is 3.98%.
• Provisions & Contingencies grew from Rs 8,651 Mn in FY20 to Rs 8,910 Mn in FY21, which is around 3% growth.
• The CASA percentage to total deposits also improved to 29% in FY2020-FY2021 as against 25% last year which is about 4% improvement in the CASA percentage for the year end.

COVID provisions:

• During this year, the bank has made an adhoc COVID provision of Rs.3400 Mn up to 9M FY 21 (Rs.1000 Mn in Q1FY 21, Rs.1150 Mn in Q2 FY 21 & Rs.1250 Mn in Q3 FY 21) in addition to Rs.1250 Mn made in Q4 FY 20. Thus, the total adhoc provision stood at Rs.4650 Mn in Dec 2020.
• During Q4 FY21, the bank has written back Rs.3090 Mn from the said provision and the same was utilized for NPA provision.
• The adhoc provision currently stands at Rs.150 Crores as on March 2021 as COVID provision.

Deposits:

• Deposits recorded a growth of 9% deposits in Q4 FY21 Rs.408 Bn to Rs.445 Bn YoY
• CASA grew from Rs 101970 Mn in FY20 to Rs 129814 Mn; YoY growth at 27.3%.
• Total deposits grew over the last 5 years with a CAGR of 10%
• CASA grew with a CAGR of 19% over the last 5 years
• Cost of deposits in Q4FY 21 was 5.05% which declined from 6.07% in Q4FY20. Cost of deposits in FY20 was recorded at 5.36%.
• CASA ratio in FY21 was recorded at 29.15%.

Advances:

• Approximately 90% of the bank’s loan book is on floating rate basis, which reduces interest rate risk.
• Working capital loans yielding higher interest constitute 61% of advances
• Term loans constitute of 38% of the total advances.
• Sectoral deployment - MSME sector has the highest share in the loan book which is around 39%, followed by agriculture and wholesale traders with 13% share each.
• Trading & MSME loans earning higher yield constitute about 54%
• Unsecured Advances aggregate to 1%
• Total Jewel Loan outstanding as on 31.03.2021 – Rs.65,402 Mn
• Advances to Major Industries such as textile, metal, automobile, chemicals, etc aggregates to 23% of the total advances.
• During the last year due to COVID pandemic and in the absence of other avenue for growth, the thrust given to improve Gold Loan which is increased by 97% from Rs.33268 Mn in FY 2020 to Rs. 65402 Mn FY 2021.
• The incremental credit growth on account of Gold Loan & ECLGS resulted in improvement of Capital Adequacy Ratio which attracts lower risk weights. Due to that the CRAR increased from 16.76% in FY 20 to 19.52% in FY 21.

Asset quality: 

• Gross NPA in FY21 stands at Rs 18,932 Mn. Gross NPA % stands at 5.11%
• Net NPA to net advances ratio stands at 2.97%
• The bank had disclosed a slippage of Rs.11340 Mn in Q3 FY21 as proforma NPA against which the actual slippage for 31.03.2021 stands reduced at Rs.11096 Mn
• The recovery of NPA account increased to Rs.110 Crores i.e. Rs.76 Crores in live and Rs.34 Crores in technical write off during the Q4 compared to Rs.106 Crores with a live recovery account of Rs.73 Crores and technical write off recovery of Rs.33 Crores in Q3 FY21.
• The total recovery for the whole year was Rs.324 Crores with a live recovery of Rs.221 Crores and technical write off recovery of Rs.103 Crores against Rs.409 Crores comprising of live recovery of Rs.300 Crores and Rs.109 Crores technical write off recovery in FY2020-FY2021 predominantly during the pre COVID period.

Investments:

• The bank has a total Investments of Rs 95,232 Mn in FY21 from which SLR Securities investment is Rs 93,328 Mn and Non-SLR Securities investment is Rs 1,904 Mn.
• Yield on Investments in FY21was 5.86%.

Credit rating:

• ICRA has assigned “AA-” for Long Term and “A1+-” for Certificate of Deposits (CD)
• CRISIL has assigned “A1+” for Certificate of Deposits (CD)