ING Vysya Bank posts healthy Q3 figures

Vidrum / 17 Jan 2012

ING Vysya Bank has posted its Q3 FY12 results. The bank posted an all round good performance and has shown improvement in most of its key parameters. Its NIM has improved even in a high interest rate regime, which is commendable.

Post market hours on Jan 16, 2012, ING Vysya Bank posted its Q3 FY12 results. The bank posted an all round good performance. Today the scrip closed 0.08% higher at Rs 313.40, and it seems that the markets have already factored in the good set of numbers.
In Q3 FY12, the Net Interest Income (NII) of the bank increased by 32% to Rs 323.6 cr, while its Net Profit grew by 44% to Rs 119.5 cr.

The following are ING Vysya Bank's key financial parameters:

Particulars (Rs/Cr) Q3 FY12 Q3 FY11
Net Profit 119.5 83
CASA (%) 32.6 33.5
NIM (%) 3.49 3.1
CAR (%) 14.08 12.69
Provisions 33.4 33.6
Gross NPA (%) 2.01 2.66
Net NPA (%) 0.31 0.64
Return on Assets (%) 1.13 0.88



 Revenue Profit Before Tax
Segment (Rs/Cr) Q3 FY12 Q3 FY11 % Change Q3 FY12 Q3 FY11 % Change
Treasury Operations 873.19 588.94 48.26 6.55 4.31 51.97
Retail Banking 839.59 649.7 29.23 77.44 57.41 34.89
Wholesale Banking 611.54 442.75 38.12 93.89 65.95 42.37
Other Banking Operations





Less Inter segment -1162.87 -823.88 41.15


Unallocable



-1.87
Total 1161.45 857.51 35.44 177.88 125.8 41.4

The bank has showed an improvement in most of its key parameters. Even in a high interest rate regime, its Net Interest Margin (NIM) has improved, which is commendable. On a YoY basis, the NIM increased by 39 bps to 3.49%, while QoQ, the margin improved by 14 bps. Also, the asset quality of the bank improved further. In Q3 FY12, its Gross Non-Performing Assets (NPAs) decreased by 65 bps to 2.01%, while the Net NPAs contracted by 33 bps to 0.31% on a YoY basis.

In Q3 FY12, the provisions made by the bank were Rs 33.4 cr, which was almost similar to that made in the similar period last year.
However, the provision coverage ratio improved from 76.41% to 84.98%, which is an indication that the bank has made enough provisions for its riskier loans. As on Dec 31, 2011, the Capital Adequacy Ratio (CAR) of the bank increased by 139 bps to 14.08% as compared to the CAR in the similar period last year. Tier 1 CAR stood at 10.99%.

The Gross Advances of the bank showed a growth of 22.2% to Rs 26752 cr as of Dec 31, 2011, which is above the RBI's FY12 credit growth projection of 18%. The total deposits increased by 16.1% to Rs 31654.5 cr. This was on the back of demand deposits, which grew by 13%, while term deposits witnessed a growth of 17.6%. As the bank is offering higher interest rates on its fixed deposits, the growth in this segment is bound to be higher. On the demand deposits side, the bank saw a growth of 21.4% in its current accounts (CA), and a growth of merely 5.8% in savings accounts (SA).

One should note that the component of CA is more in ING Vysya Bank, which may help it to acquire low cost deposits. However, the bank should not lose out on its customer base, as the deregulation in savings accounts has resulted some banks (like IndusInd banks) to mobilise more funds in saving accounts in Q3 FY12.

Treasury operations is the major contributor for the bank as compared to its other segments. Revenues from the Treasury increased by 48% to Rs 873 cr, while the profits increased by 52% to Rs 6.55 cr. To some extent, this may be due to the softening of the govt. bond yield, which had a positive impact on its bond portfolio.

We believe that the bank has posted a very good set of Q3 FY12 numbers. Almost all the parameters of the bank have showed improvement YoY. We believe that the bank is focussed on its asset quality front, has shown improvement in its NIMs, and shows good business (advances and deposits) growth.

Also, in a televised interview, the company's management has said that the bank has no further requirement of capital for the next two years. As of now, it also has no plans of deregulating the savings interest rates. We believe that the bank is in decent shape, and one can invest in the scrip in a staggered manner keeping a long-term horizon in mind. With the interest rate cycle set to reverse in the coming quarters, the bank will be benefitted going ahead.

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