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Corp Bank: Profits take a huge tumble - Views on News from Equitymaster

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Corp Bank: Profits take a huge tumble

Nov 14, 2013

Corporation Bank declared its results for the second quarter (2QFY14) and first half (1HFY14) of the financial year 2013-2014. The bank has reported 13.3% YoY growth in net interest income and 96.2% YoY decline in net profits. Profits for the first half declined by 50% YoY. Here is our analysis of the results.

Performance summary
  • Net interest income grows by 13.3% YoY in 2QFY14, on the back of healthy 23.3% YoY growth in advances.
  • Net interest margin (NIM) moved downwards to 2.2% levels during the first half of FY14.
  • Net NPA (non-performing assets) to advances spiked to 2.2% in 2QFY14 from 1.4% in 2QFY13.
  • Other income grows modest 4.2% YoY in 2QFY14 on the back of core income growth of 11% YoY.
  • However; net profits report a stupendous fall of 96.2% YoY for 2QFY14 on account of higher provisions and higher operating costs.
  • Capital adequacy ratio currently stands at 10.6% at the end of 2QFY14 as per Basel III norms.

Rs (m) 2QFY13 2QFY14 Change 1HFY13 1HFY14 Change
Interest income 37,445 44,340 18.4% 73,951 87,055 17.7%
Interest expense 29,412 35,241 19.8% 57,834 68,309 18.1%
Net Interest Income 8,032 9,098 13.3% 16,117 18,746 16.3%
Net interest margin (%)       2.3% 2.2%  
Other Income 3,260 3,397 4.2% 6,536 9,209 40.9%
Other Expense 4,435 5,852 32.0% 9,097 12,362 35.9%
Provisions and contingencies 2,688 6,998 160.3% 4,854 10,468 115.6%
Profit before tax 4,169 -355 -108.5% 8,702 5,125 -41.1%
Tax 112 -510 -554.5% 942 1,190 26.3%
Effective tax rate 2.7% 143.5%   10.8% 23.2%  
Profit after tax/ (loss) 4,057 155 -96.2% 7,760 3,935 -49.3%
Net profit margin (%) 10.8% 0.3%   10.5% 4.5%  
No. of shares (m)         152.9  
Book value per share (Rs)*         651.3  
P/BV (x)         0.4  
* (Book value as on 30th September 2013)
What to expect?
At the current price of Rs 265, the stock is valued at 0.4 times its FY16 estimated adjusted months book value. We will furnish the detailed result review shortly post incorporation of key takeaways from the Management.

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Mar 25, 2019 09:27 AM


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