Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
KVB: Other income powers 3Q - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Feb 6, 2002

    KVB: Other income powers 3Q

    The disappointment from Karur Vysya Bank (KVB) continued for the third quarter. The bank reported a 9% drop in income from operations and a 69% fall in operating profits. However, a steep rise in other income saved the day for the bank. Its earnings jumped by 53% in the December quarter.

    (Rs m) 3QFY01 3QFY02 Change 9m FY01 9m FY02 Change
    Income from operations 1,225 1,112 -9.2% 3,522 3,388 -3.8%
    Other Income 27 394 1347.4% 170 763 350.1%
    Interest expense 768 790 2.8% 2,248 2,366 5.2%
    Net interest income 457 322 -29.4% 1,273 1,022 -19.7%
    Other expenses 192 241 25.1% 593 681 14.8%
    Operating Profit 265 82 -69.1% 680 341 -49.8%
    Operating Profit Margin (%) 21.6% 7.4%   19.3% 10.1%  
    Provisions and contingencies 59 93 58.5% 236 187 -20.6%
    Profit before Tax 233 383 64.1% 614 917 49.3%
    Tax 69 132 89.8% 108 309 186.6%
    Profit after Tax/(Loss) 164 251 53.2% 506 608 20.1%
    Net profit margin (%) 13.4% 22.6%   14.4% 17.9%  
    No. of Shares (m) 6.0 6.0   6.0 6.0  
    Diluted Earnings per share* 109.2 167.3   112.2 134.8  
    P/E Ratio   1.6     2.0  

    Slowdown in credit offtake and dismal capital markets impacted interest income growth of the bank. Interest income on the bank's core advances, which accounts for 57% of its total interest income declined by 5% in the first nine months of FY02. The bank's investment income too declined by 8%. The bank is expected to have invested in short term securities by liquidating long term gilt securities (which earned higher interest for the bank in the comparable previous period). As incremental investment would be at comparatively lower interest rates, it impacted income from investments.

    Revenue mix
    Rs m) 3QFY01 3QFY02 Change 9m FY01 9m FY02 Change
    Interest on advances 717 611 -14.8% 2,021 1,924 -4.8%
    Income on investments 464 421 -9.3% 1,316 1,211 -8.0%
    Interest on balance with RBI 43 80 84.8% 183 252 38.2%
    Others 1 0 -77.8% 2 2 -34.8%
    Total 1,225 1,112 -9.2% 3,522 3,388 -3.8%

    KVB's other income skyrocketed to Rs 394 m from Rs 27 m in 3QFY01. Consequently, the proportion of other income to total income rose to 26% in 3QFY02 from a mere 2% in the comparable previous quarter. As stated earlier, the bank could have liquidated its investments in long dated securities and capital gains on these securities could have fueled its other income figure.

    During the first nine months, the bank's net interest income declined by 20%. This is mainly due to less than proportionate fall in the bank's average cost of borrowings. This is evident from a 5% rise in interest expense while interest income declined by 5%. KVB however, managed to control its operating expenses. The bank's cost to income ratio reduced to 38% during the period April-December 2001 from 41% in the comparable previous period. KVB's effective tax rate too soared to 34% in the first nine months (from 18% in 9m FY01) as the bank has made higher provisions for deferred tax in line with the Accounting Standard - 22.

    At the current market price of Rs 268, KVB is trading at a P/E of 2x and Price/Book value ratio of 0.5x, on 9m FY02 annualised earnings. The bank's subdued valuations are the result of its dwindling financial performance, regional nature (south India based bank) and a lack of new generation banking technologies.



    Equitymaster requests your view! Post a comment on "KVB: Other income powers 3Q". Click here!


    More Views on News

    IDFC Bank: Strong Trading Income Shields Credit Slowdown (Quarterly Results Update - Detailed)

    Aug 10, 2017

    IDFC Bank is taking steps to address contracting NIMs and successfully transition in to a retail bank.

    ICICI Bank: Loan Slippages Trending Downwards (Quarterly Results Update - Detailed)

    Aug 10, 2017

    Asset quality will be the key thing to watch out for going forward.

    Axis Bank: Outside Watchlist Slippages a Big Worry (Quarterly Results Update - Detailed)

    Jul 31, 2017

    Almost 74% of the watchlist as provided by the bank of Rs 226 billion in FY16 has turned into non-performing assets.

    HDFC Bank: Asset Quality Deteriorates due to Farm Loan Waiver (Quarterly Results Update - Detailed)

    Jul 25, 2017

    Asset quality was under pressure on account of farm loan waivers. Despite the higher provisioning, the company reported a healthy profit growth of 20%.

    SBI: Merger Pushes up Bad Loans (Quarterly Results Update - Detailed)

    May 23, 2017

    State Bank of India (SBI) ended FY17 on a healthy note but concerns on bad loans from associate banks remain.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 16, 2017 (Close)


    • Track your investment in KARUR VYSYA BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks



    Compare Company With Charts