UTI Bank has recorded a 58% YoY jump in 1QFY02 net profits to Rs 254 m. Profit growth of the bank has been fueled by a substantial rise in other income.
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 retail focus of the bank through a wide branch network and an ATM network coupled with increase in deposits enabled it to grow its interest income by 58% in 1QFY02. Operating margins of the bank have also shown a rise of 70 basis points to 10.4%. However, UTI Bank's operating margins are one of the lowest in the industry. Saving and current account deposits contributed marginal 15% to total deposits in FY01. As a result the bank's cost of funds is relatively high, resulting in lower operating margins.
Investment in technology and infrastructure resulted in a 72% rise in other income. UTI Bank's cost to income ratio however declined to 33% from 54% in 1QFY01. Similarly, the tax provision by the bank has increased by about 280% but the effective tax rate has come down to 22% from 23% in 1QFY01.
Adverse capital market and industrial scenario is reflected in higher provisioning. The bank's NPA ratio stood at 3.4% as on FY01. Its capital adequacy ratio (CAR) of 7.9% is however below the 9% norm by RBI. The bank is required to raise capital to maintain minimum CAR of 10% by FY02 and also to support its high growth.
At the current market price of Rs 30, UTI Bank is trading at PER of 3.7x FY02 projected earnings. The Bank's Price/Book value ratio of 1x is comparatively less than its private sector peers. If the bank raises the amount through equity it could result in a dilution in its equity base, resulting in reduction in earnings per share.
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: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407