City Union Bank Q3 Review - Near Term Stress Higher, But Sufficient Cover: Centrum Broking
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Centrum Broking Report
City Union Bank Ltd.’s earnings were mixed with a strong operating performance but asset quality surprised negatively.
Net interest income was a beat driven by better net interest margin (led by further reduction in funding cost) while loan growth (up 7.9% YoY) was a tad higher.
Other income too outperformed led by better fee income and higher treasury gains.
Provisions rose as Rs 1.25 billion was provided to strengthen the balance sheet (Covid-19 provisions Rs 4.65 billion).
Proforma gross non-performing asset/net non-performing asset basis recognition from September 2020, spiked to 6.0%/3.4% (QoQ 3.8%/2/2%), with overall restructuring being guided at 5%.
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