• JULY 20, 2000

UTI Bank posts remarkable topline growth

UTI Bank has recorded a YoY 152% jump in its net profits to Rs 161 m in 1QFY01. However if we exclude the provision & contingencies from the profits it reflects an increase of just 27%. The retail focus of the bank through wide branch and ATM network coupled with increase in low cost deposits enabled the bank to grew its interest income by 57% during the 1QFY01.

However due to more than proportionate increase in the interest expenses operating margins declined to 9.7% (14.4% in 1QFY00). The rise in the other expenses by 74% was mainly on account of investment in technology and training of human resources which will drive the bank's future profits.

(Rs m)1QFY001QFY01Change
Interest Income 1,075 1,688 57.0%
Other Income 169 298 76.0%
Interest Expended 921 1,525 65.7%
Operating Profit (EBDIT) 155 163 5.4%
Operating Profit Margin (%)14.4%9.7% 
Operating Expenses 125 218 74.8%
Depreciation 28 30 10.5%
Profit before Tax17221223.7%
Provisions & Contingencies652-96.3%
Tax 43 49 12.9%
Profit after Tax/(Loss) 64 161 152.2%
Net profit margin (%)5.9%9.4% 
No. of Shares (eoy) (m) 131.9 131.9  
Diluted number of shares 131.9 131.9  
Diluted Earnings per share*1.94.9 

The bank has plans to establish itself as a one stop financial mart through its focus on retailing and cross-selling other financial products. As part of its new strategy the bank will leverage the synergies with its promoting institutions (UTI, LIC, GIC) in all areas of operations.

At the current market price of Rs 41, UTI Bank is trading at PER of 8.4 times its 1QFY01 annualised earnings. The Bank's Price/Book value ratio of 2.1 times is comparatively less than HDFC Bank's 8 times and ICICI Bank's 4 times. The bank's focus on e-commerce and improvement in NPA ratio will improve the valuations in time to come.

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 (Research Analyst) bearing Registration No. INH000000537 (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, Canada or the European Union countries, 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 (Research Analyst)
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