City Union Bank Posts Flattish Number In Q4FY14

City Union Bank (CUB), one of the oldest private sector banks, came out with flattish set of numbers for the quarter of March 2014. Net profit of the bank for January- March 2014 quarter grew by mere 1.1% on yearly basis to Rs 83.34 crore for Q4FY14. The fall in the profit may be attributed to the overall poor performance of the bank.

Net interest income (NII), the difference between interest earned and interest expended, of the bank grew by mere 6.5% on yearly basis to Rs 184.66 crore in January-March quarter. The advances of the bank grew by 5.5% on yearly basis as management of the bank deliberately slowed the lending due to bad economic growth. Other income of the bank saw a healthy growth of 12.8% on yearly basis to Rs 90.84 crore. 

Total expenses of the bank have increased by huge 26.2% in the same duration to Rs 131.52 crore. This was because bank has added around 50 branches last year and these branches are yet to contribute to the revenue in a meaningful way. Therefore, though the expenses increased but revenue did not increase in the same way. As a result, the operating profit of the bank was down by 3.8% on yearly basis to Rs 143.96 crore. Nevertheless, net profit of bank saw a marginal increase due to 32.6% fall in the provision and contingencies to Rs 29.62 crore for Q4FY14.

The asset quality of the bank continued to see stress. Gross non-performing assets (NPA) and net NPA of the bank increased by 9% and 42% respectively on sequential basis. According to the management much of the slippages during the quarter and year were from steel and manufacturing sector. As proportion to the gross advances and net advances, gross NPA and net NPA has increased by 11 basis points and 34 basis points respectively to 1.81% and 1.23% respectively. 

Following the result, shares of CUB dropped by 4% from its today's peak and closed at Rs 71.7. Currently shares of CUB are trading at price to book value of around 1.6 times.