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Global Trust Bank: Operating profits up 113%

Nov 6, 2000

Global Trust Bank (GTB) has doubled its operating profits in the 2QFY01 fueled by higher operating margins. The operating profit margins of the bank improved by 700 basis points due to lower interest cost.

(Rs m) 2QFY00 2QFY01 Change
Operating Income 1,422 2,125 49.4%
Other Income 482 157 -67.4%
Interest Expenses 1,187 1,625 36.9%
Operating Profit (EBDIT) 235 500 112.7%
Operating Profit Margin (%) 16.5% 23.5%  
Other expenses 185 246 33.1%
Depreciation 110 110 0.3%
Profit before Tax 423 302 -28.6%
Other provisions 102 -39  
Tax 78 26 -66.3%
Profit after Tax/(Loss) 243 314 29.4%
Net profit margin (%) 17.1% 14.8%  
No. of equity shares (m) 104.0 121.4  
Diluted Earnings per share* 8.0 10.4  
P/E (at current price) 11 8  
*(annualised)      

However, profits of the bank actually declined by 20% excluding the provisions for depreciation in the value of investments (The investment portfolio of the bank has been classified in terms of RBI guidelines). Also the decline in other income by 67% led to lower growth in profits.

During the first half ended September 2000 the bank's advances witnessed an increase of 33% and deposits grew by 44%. Its credit/deposit ratio however, declined to 50% (from 55% in 1HFY00). GTB has healthy capital adequacy ratio of 14.1% as on September 2000.

At the current market price of Rs 86 GTB is trading at a P/E multiple of 8 times its 2QFY01 annualised earnings with a Price/Book value ratio of 1.7 times. The business drivers of the bank in future would be its thrust on retail banking, investment banking and e-commerce initiatives.

Comparative Valuations
Particulars HDFC Bank ICICI Bank UTI Bank
Market Price (Rs) 250.0 124.0 39.5
P/E (x) 30.9 20.3 6.8
Price/Book value (x) 8.1 1.8 2.1

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