City Union Bank Posts Higher Numbers In Q4FY13

City Union Bank (CUB), one of the oldest south-based private sector banks, closed up by almost 2% in today's trading despite the broader markets falling by three-tenth of a per cent. The reason for such good performance by the bank was the better-than-expected fourth quarter results posted by the bank. The net profit of the CUB for the fourth quarter of FY13 has increased by 15% on a yearly basis to Rs 82.47 crore.

Such increase in the profit was aided by a healthy increase in its net interest income (NII), which went up by 27% on a yearly basis to Rs 173.31 crore. The Other Income of the bank too saw a decent growth of 32% in the same period to Rs 80.55 crore. However, the increase in provisioning by 48% YoY to Rs 43.7 crore has pulled down the profits to a certain extent.

Nonetheless, there has been an improvement in the asset quality of the bank on a sequential basis. Its Gross NPAs have come down by 10 bps sequentially to 1.13%, whereas the net NPAs have remained flat at 0.63%.

The shares of CUB are currently trading at a price-to-book value of 1.9x, which fairly discounts the bank's performance. Hence, we remain neutral on this counter.