Syndicate Bank Q3FY14 Result Analysis

Syndicate Bank announced its Q3FY14 financial results today (January 31, 2014), posting a net profit of Rs 380 crore for the quarter ended December 30, 2013, down by 25.20% compared to that of Rs 508 crore for the corresponding quarter in the previous year.

As regards its operational performance, the bank posted a net interest income of Rs 1358.53 crore, down by 2.95 % YoY from Rs 1399.79 crore in Q3FY13. The bank’s other income grew by 8.55% to touch Rs 292.34 crore in Q3FY14  from Rs 269.31 crore in Q3FY13. Net Interest margin (NIM) stood at 2.76% in Q3FY14 as against 3.29% in Q3FY13.

Syndicate Bank has managed to sustain its asset quality at the previous levels. For the December 2013 quarter, it’s gross and net NPAs stood at 2.8% and 1.66% respectively, as against 2.88% and 1.66% seen in the previous quarter (Q2FY14). The Gross NPAs stood at Rs 4400.98 crore in the elapsed quarter as against Rs 4471.81 crore as on September 30, 2013. The provisions and contingencies declined by 13.41% YoY (up 35% QoQ) to Rs 458.93 crore. The bank's Capital Adequacy Ratio (CAR), as per the Basel III norms, stood at 11.26% as on December 30, 2013, compared with 11.58% in the September 2013 quarter.

On the day of the results announcement, the company’s shares gained 6.42% to touch Rs 85.40. The provisions for rising NPAs were the largest contributors to the losses and may remain elevated for the next quarter. We advise investors to trade cautiously in the counter.