Dolat Capital: Initiating Coverage on City Union Bank - A Dependable Franchise
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Dolat Capital Report
City Union Bank Ltd. is known for its consistently higher return ratios, contained asset quality and stable leadership.
Sticking to their relationship-based low ticket collateralized lending, avoiding the temptation of consortium lending/ wholesale borrowing, and growing in their region of expertise (Tamil Nadu and south) has held the bank in good stead over the years.
However, more recent years have seen softer recovery trends, resulting in gradual rise in non-performing asset ratio, even though return on asset impact was limited as net interest margin benefitted from increased efficiency (higher credit-deposit ratio) around the same time.
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