• AUGUST 6, 2002

GTB: Profits dip again

Global Trust Bank (GTB) has again reported a dismal performance for the quarter ended June 2002. The bank's first quarter profits declined by over 20% and interest income was also down by 16%. Its net interest income however, witnessed a growth of 28% due to a steep reduction in interest cost.

(Rs m)1QFY021QFY03Change
Income from operations 2,004 1,686 -15.9%
Other Income 606 305 -49.6%
Interest expense 1,768 1,384 -21.7%
Net interest income 236 302 27.9%
Other expenses 382 406 6.3%
Operating Profit (146) (104)-28.8%
Operating Profit Margin (%)-7.3%-6.2% 
Provisions and contingencies 280 72-74.2%
Profit before Tax 180 129 -28.0%
Tax 17 - -
Profit after Tax/(Loss)163129-20.7%
Net profit margin (%)8.1%7.7% 
No. of Shares (m) 121.4 121.4  
Diluted Earnings per share*5.44.3 
P/E Ratio 4.5 

Apart from a decline in the bank's core interest income, fee based income also witnessed a sharp fall. The contribution of non-interest income to total income declined to 15% from 24% in FY02. While interest income recorded a dip, the bank's operating expenses continue to rise. Consequently, its cost to income ratio jumped to 67% in 1QFY03 from 45% in the comparable previous quarter.

Interest income break-up
(Rs m)1QFY021QFY03Change
Interest on advances 1,130 950 -15.9%
Income on investments 828 693 -16.4%
Interest on balance with RBI 32 43 32.6%
Others 14 0 -98.6%
Total 2,004 1,686 -15.9%

As part of its business restructuring, GTB aims to continue its thrust on quality growth, improve internal systems & procedures and enhance its portfolio of products & services significantly in FY03. Towards this end, the bank has taken up a number of steps including scaling down of exposure limits to capital markets, reconstitution of credit committees, reducing higher risk portfolios, reviewing and restructuring industry wise exposure and establishment of highly skilled corporate banking teams at strategic locations. The bank also aims to bring down its high cost deposits and reduce asset size.

At the current market price of Rs 19, GTB is trading at a P/E of 5x 1QFY03 annualised earnings and price to book value ratio of 0.6x. Its capital adequacy ratio (CAR) at 11% is likely to assist the bank in its business expansion. However, it would take some time for the bank to rebuild its brand and attract business volumes.

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