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.
Other income fuels UTI Bank's 1Q profits - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 11, 2001

    Other income fuels UTI Bank's 1Q profits

    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.

    (Rs m) 1QFY01 1QFY02 Change
    Interest Income 1,688 2,664 57.8%
    Other Income 298 1,009 239.2%
    Interest Expenditure 1,525 2,388 56.6%
    Operating Profit (EBDIT) 163 276 69.2%
    Operating Profit Margin (%) 9.7% 10.4%  
    Other Expenditure 249 426 71.5%
    Profit before Tax 212 859 304.7%
    Provisions & Contingencies 2 419 17345.8%
    Tax 49 187 281.4%
    Profit after Tax/(Loss) 161 254 57.6%
    Net profit margin (%) 9.5% 9.5%  
    No. of Shares (eoy) 132 132  
    Diluted Earnings per share* 4.9 7.7  
    P/E (at current price)   3.9  

    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.



    Equitymaster requests your view! Post a comment on "Other income fuels UTI Bank's 1Q profits". Click here!


    More Views on News

    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.

    Axis Bank: Higher Provisioning Eats into Bank's Profitability (Quarterly Results Update - Detailed)

    May 12, 2017

    Asset quality woes continue to haunt the Bank's financial performance for the year ended March 2017.

    Axis Bank: Provisioning Woes Multiply (Quarterly Results Update - Detailed)

    Jan 24, 2017

    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.

    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.

    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.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    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 18, 2017 (Close)


    • Track your investment in AXIS 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