2025-11-20 09:07:06
Latest Post
SpiceJet Completes Major Restructuring, Removes US $50 Million in Liabilities
NTPC Green Energy Ltd inks MoU with The Singareni Collieries Company Ltd for development of RE Projects
UFO Moviez Enters into a Strategic Alliance with Miraj Cinemas for Exclusive Advertising Rights Across 239 Screens in 49 Cities and 72 Locations
Canara Bank marks 120th Founders Day with the opening of its 10,000th Branch in Budigere Cross, Bengaluru
DevX launches Capital One, touted as the single largest, managed office space campus across Tier II cities
Research
Dena Bank - 4QFY2012 Result Update - Angel Broking
Posted On : 2012-05-15 21:48:27( TIMEZONE : IST )
Dena Bank registered strong 62.3% yoy growth in its net profit to Rs.255cr for 4QFY2012, despite significantly higher provisioning expenses, on account of higher growth in operating income and tax write back of Rs.70cr. We recommend Buy on the stock.
Business growth strong; Asset quality moderate: On a yoy basis, advances and deposits growth for the bank was above system-average at 26.5% and 20.2%, respectively. Loan growth was primarily driven by growth in MSME and retail portfolio, which increased by 22.2% and 18.7% yoy, respectively. Due to strong 34.2% yoy growth in current deposits, CASA deposits grew by healthy 16.9% yoy, but growth was below overall deposits growth at 20.2% yoy, which led to a 96bp yoy (44bp qoq) decline in CASA ratio to 34.5%. Yield on advances for the bank declined by 23bp qoq to 12.0% in 4QFY2012, while cost of deposits increased sequentially by 34bp, leading to a sequential decline of 12bp in reported NIM to 3.2%. Non-interest income grew by 5.9% yoy to Rs.191cr, mostly due to strong 34.9% growth in fee income. The bank reported moderate asset quality. Gross NPA ratio improved to 1.67% in 4QFY2012 from 1.85% in 3QFY2012, while net NPA ratio improved to 1.01% from 1.10% in 3QFY2012. Provision coverage ratio (including technical write-offs), though dipped sequentially by 103bp, remained at healthy levels of 75.5%. Slippages (Rs.244cr) increased on a sequential basis, with annualized slippage ratio coming at 2.2% in 4QFY2012 compared to 1.5% in 3QFY2012. The bank restructured advances worth Rs.1,600cr during the quarter, which majorly included SEBs. The bank's outstanding restructured book stood at Rs.3,410cr (6.0% of loan book). Management has guided for no major advances (except for Rs.200cr loan of state discom) to be in the restructuring pipeline.
Outlook and valuation: Dena Bank structurally has a strong CASA franchise (at ~35% levels), aiding better NIMs than peers. We were cautious on the bank's asset quality; however, so far, the bank's asset quality has held up reasonably well compared to peers. Hence, we maintain our Buy rating on the stock with a target price of Rs.111.
