idbi bank q2fy12 result update

8/3/2019 IDBI Bank Q2FY12 Result Update

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Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: [email protected]

NG TERM INVESTMENT CALL

BUY21 October 2011

Company Report | Q2FY12 Result Update

Q2FY12 Result Highlights

IDBI Bank’s (IDBI) PAT grew by 20% to INR 5.15 bn on YoY basis

and on sequential basis by 54% due to lower provisioning & tax

expenses. However the net interest income (NII) has fallen by 4%

& 3% to INR 11.2 bn on YoY & QoQ basis respectively. The non-

interest income stood at INR 4.7 bn declining by 3% on YoY basis,

due to lower fee income of INR 3.6 bn.

Advances grew by 20% to INR 1.56 tn because of higher growth in

retail portfolio. Deposits grew by 13% to INR 1.7 tn. The

proportion of bulk deposits in total deposits is also reducing due

to a rise in retail term deposits. It now constitutes around 60% of

deposits. The bank is targeting to reduce the same to 50% in the

next two years. CASA ratio increased to 19.19% in Q2FY12 from

15.26% in Q2FY11. Due to higher cost of deposits NIMs declined

by 24 bps & 7 bps to 2% in Q2FY11 on YopY & QoQ basis

respectively.

During Q2FY12, overall asset quality deteriorated with higher

slippages. The gross and net non performing assets (NPAs)increased to 2.47% and 1.57% in Q2FY12 from 1.88% and 1.19% in

Q2FY11 respectively. The slippages remained high at INR 9.25 Bn,

mainly contributed by the small and medium enterprise (SME)

segment.

The tax provisions were lower during the quarter (24.8%

compared to 44.6% in Q2FY12) while they were around 34% for

H1FY12, in line with the guidance for the full year. The provision

expenses declined by 27.4% & 24.7% on YoY & QoQ basis

respectively, due to lower provision requirement on NPAs (INR

1.83 Bn vs INR 3.6 Bn in Q1FY12). The bank also provided INR

1.08 Bn towards depreciation in security receipts.

The cost to income ratio of the bank stood at 37.1% as against

38.2% in Q2FY11 and 34.9% in Q1FY12. The bank has opened 25

branches during the quarter taking the total branches to 908. The

bank plans to expand its branch network to 1,000 branches by

FY12.

Industry Banking

CMP (INR) 104Target (INR) 196

52 week High/Low (INR) 202/94

Market Cap (INR BN) 103187

3M Avg. Daily Volumes 2074600

P/BV FY12E 0.7x

Shareholding Pattern (%)

Promoters,

65.13%

FII, 3.04%

Others,

16.05%Institutions,

15.78%

Stock Performance

80

100

120

140

160

180

200

O c t

N o v

D e c

J a n

F e b

M a r

A p r

M a y

J u n

J u l

A u g

S e p

O c t

IDBI NSE Nifty Performance (%)

1 Month 3 Months 1 Year

IDBI -3.7 -22.0 -36.9

NIFTY -0.9 -8.5 -14.9* Source: Ace, Unicon Research

Analyst

Shweta Rane | [email protected]





Outlook & ValuationThe management has maintained its strategy of slower loan book growth, in favour of a higher CASA share and higher NIMs

& indicated to take branch network to about 1050 by end of FY12. While the present 908 branches are predominantly urban-

concentrated (67%), the bank intends to increase its presence in semi-urban & rural areas going forward. We believe this

would continue to increase the contribution of retail deposits in the bank’s funding mix and drive strong growth in CASA. In

wake of lower NIMs, the bank has indicated a strategy of lower advances growth (~15% for FY12) than the system to

concentrate on increasing the percentage of low-cost CASA deposits and consciously shifting focus from large corporate

lending to retail and MSME lending to bring in higher-yielding loans. In next few quarters bank is likely to face challenges on

the asset quality front, due to slow recovery, higher slippages. Though, the bank has opted for low business growth and

improving performance, we expect the bank to return to growth trajectory once its performance parameters come in line with

industry average. At CMP, the stock is trading at 0.6x BV of FY13E. We maintain BUY recommendation with a price target of

INR 196.

Financials(INR in mn)

Q2 FY12 Q2 FY11 Y-o-Y Q1 FY12 Q-o-Q

Interest income 58123 45773 26.98 56289 3.26

Interest expense 46903 34092 37.58 44765 4.78

Net Interest Income 11220 11680 -3.94 11524 -2.64

Other Income 4791 4921 -2.64 4309 11.19

Total Operating income 16011 16602 -3.56 15833 1.12

Operating expenditure 5947 6345 -6.28 5525 7.62

Operating Profit 10065 10256 -1.87 10308 -2.36

Operating Profit (%) 16.00 20.23 -423 bps 17.01 -101 bpsProvisions 3206 4415 -27.40 4257 -24.70

PBT 6859 5841 17.43 6052 13.34

Tax 1700 1550 9.68 2700 -37.04

PAT 5159 4291 20.23 3352 53.93

EPS (INR.) 5.24 4.36 20.21 3.40 53.93

NIMs 2.00 2.24 -24 bps 2.07 -7 bpsSource: Company, Unicon Research *Standalone





Unicon Investment Ranking Methodology

Rating Buy Accumulate Hold Reduce Sell

Return Range >= 20% 10% to 20% -10% to 10% -10% to -20% <= -20%

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idbi bank q2fy12 result update

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