ICICI Securities: City Union Bank - Collection Improving; Return To Normalcy To Be Prolonged 
Indian rupee banknotes being counted. (Photographer: Dhiraj Singh/Bloomberg)

ICICI Securities: City Union Bank - Collection Improving; Return To Normalcy To Be Prolonged 

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

City Union Bank Ltd.’s Q1 FY21 earnings revived to Rs 1.5 billion supported by strong net revenues, cost flexibility and sequentially lower provision.

Net interest income grew 4% QoQ driven by 7 basis points QoQ margin expansion. Asset resilience reflects in sharp reduction in the moratorium portfolio to 12.5% as at June 2020 from approximately 52% in March 20.

About 70% customers paid all dues and approximately 88% paid at least one equated monthly installment/interest as at June 2020.

While we repose faith in City Union Bank’s small and medium-sized enterprise financing niche, coupled with its robust retail liability franchise to manage the crisis effectively, non-paying customer base at 12% (belonging to vulnerable segments like tourism, hotel, commercial real estate, lease rent discounting, retail textile, etc.) poses risk of near-term volatility in asset quality and earnings.

Click on the attachment to read the full report:

ICICI Securities City Union Bank Q1FY21 Results Update.pdf

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