UTI Bank has recorded a 69% jump in its net profits to Rs 861 m for the year ended March '01. The bank has also maintained a healthy topline growth of 83% for the year. It derives nearly 40% of its operating income from interest on investments.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Provisions & Contingencies
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares (eoy)
Diluted Earnings per share*
P/E (at current price)
The profit growth of the bank however, tapered down during the fourth quarter to 2%. Net profit growth was over 100% in the last three quarters due to substantial decline in provisions. Also in the last quarter its operating margins fell to 10.2% from 22% in the corresponding previous quarter. As a result operating profits actually dropped by 15% in 4QFY01.
UTI Bank invested aggressively during the year in expanding its network (through ATMs) and in technology. This has resulted in almost doubling of other expenses to Rs 1.3 bn. Also a provision of Rs 280 m for diminution in the value of investments (included in other expenses) trimmed the profit growth of the bank.
At the current market price of Rs 33, UTI Bank is trading at PER of 5x its FY01 earnings. Its price to book value ratio of 1.7x is comparable among its peers in the industry. Although the topline performance of the bank is commendable, sliding operating margins are a concern. This is on the back of high cost of funds. Its a challenge for the bank to improve its OPM considering the softer interest rate regime going forward. However, with the increase in saving account deposits and growing proportion of retail assets, UTI Bank will be able to move up its margins in future.
Axis Bank declared the results for the third quarter of the financial year ended March 2017 (3QFY17). The bank has reported 4.1% YoY growth in net interest income while net profits declined 73.4% YoY in 3QFY17.
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: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407