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.
Vysya Bank: Operating loss widens - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Aug 21, 2002

    Vysya Bank: Operating loss widens

    Vysya Bank has reported dismal performance again with 8% drop in interest income and higher operating loss of Rs 301 m. The bank's net profits however, rose by over 10% due to higher other income and a 41% drop in provisions for non-performing assets.

    (Rs m) 1QFY02 1QFY03 Change FY01 FY02 Change
    Income from operations 2,357 2,177 -7.6% 8,893 9,226 3.7%
    Other Income 746 807 8.2% 1,239 2,813 127.2%
    Interest expense 2,030 1,814 -10.7% 7,160 7,404 3.4%
    Net interest income 327 364 11.3% 1,733 1,822 5.1%
    Other expenses 539 664 23.3% 1,828 2,591 41.7%
    Operating Profit (212) (301) 41.7% (95) (769) 707.7%
    Operating Profit Margin (%) -9.0% -13.8%   -1.1% -8.3%  
    Provisions and contingencies 263 154 -41.4% 657 1,104 68.1%
    Profit before Tax 271 352 30.0% 486 940 93.3%
    Tax 70 129 84.7% 101 253 150.0%
    Profit after Tax/(Loss) 201 223 10.9% 385 688 78.5%
    Net profit margin (%) 8.5% 10.2%   4.3% 7.5%  
    No. of Shares (m) 22.6 22.6   22.6 22.6  
    Diluted Earnings per share* 35.5 39.4   17.0 30.4  
    P/E Ratio   7.0     9.1  

    After having witnessed a 1% decline in FY02, the bank's core interest income from advances fell sharply by 7%. Income from investments also grew in a single digit by 7% due to decline in yields over the last one year. On the other hand, the bank's fee based income rose at a comparatively better rate of 8%, forming 27% of total income (from 24% in 1QFY02). With increasing competition, it would be a challenging task for the bank to generate higher fee based income, considering its relatively small size and level of technology integration.

    Income breakup
    (Rs m) 1QFY02 1QFY03 Change FY01 FY02 Change
    Interest on advances 1,248 1,165 -6.6% 4,563 4,497 -1.4%
    Income from investments 809 865 6.9% 3,258 3,590 10.2%
    Interest on balance with RBI 275 122 -55.5% 994 1,062 6.9%
    Others 26 25 -2.0% 79 76 -3.4%
    Total 2,357 2,177 -7.6% 8,893 9,226 3.7%

    Higher operating expenses, on account of 49% increase in staff cost, pushed up the bank's cost to income ratio to 57% from 50% in 1QFY02. The bank's cost to income ratio is one of the highest in the banking sector. Staff cost of the bank increased, as the bank provided over Rs 90 m towards VRS write off in the June quarter. Vysya Bank launched VRS in February 2002 and has managed to reduce its employee strength by around 15%. The move to reduce the workforce was in line with ING's plan to reduce excess flab, ahead of its formal acquisition.

    Among other developments, the bank's foreign partner, ING has been allowed by the FIPB (foreign investment promotion board) to raise its stake in the bank, provided the 49% sectoral cap on foreign direct investment (FDI) for the banking sector is not breached. ING group has already stepped up its holding in the bank to 44%, by acquiring 5% stake from IFC (International Finance Corp.). ING aims to increase the stake further to 49%.

    At the current market price of Rs 276, Vysya Bank is trading at a P/E of 7x, 1QFY03 annualised earnings and Price/Book value ratio of 1.2x. The bank is geared well in terms of capital with capital adequacy ratio (CAR) of 11.4% as on 1QFY03. This will facilitate the bank's business expansion plans. The stock however, looks priced, compared to its peers considering its business growth, financial performance, regional nature and quality of assets.



    Equitymaster requests your view! Post a comment on "Vysya Bank: Operating loss widens". Click here!


    More Views on News

    SBI: Asset Quality and Slow Credit Remain Achilles' Heel (Quarterly Results Update - Detailed)

    Aug 22, 2017

    State Bank of India (SBI) continues to battle sliding asset quality and sluggish credit growth.

    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%.

    More Views on News

    Most Popular

    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.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    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.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    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


    Apr 15, 2015 (Close)


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



    Detailed Financial Information With Charts