City Union Bank Q1 Review - Largely Status Quo: Dolat Capital
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Dolat Capital Report
City Union Bank Ltd. reported muted net interest income growth at 2.4% YoY led by weaker net interest margin which was impacted by increased share of lower yielding Emergency Credit Line Guarantee Scheme/gold (8.5-9% yields) disbursements along with excess liquidity.
Higher operating profits and profit after tax was owing to elevated treasury gains and better core fee income.
Asset quality metrics were in line with slippages at 5.3%, restructured book at 5.5% of advances (from 5% in Q4) and special mention account-II ratio at 3.2%. SMA-II ratio does partly benefit from high regulatory forbearance.
City Union Bank's management maintained its earlier guidance of return on asset normalisation by H2 FY23E, with FY22E slippages likely to remain at par with or slightly below FY21 levels as per management.
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