Accumulate Syndicate Bank - Dolat Capital

Syndicate Bank's strategy of moderate business expansion with improvement in low-cost deposits share and improvement in margin led to improvement in overall profitability.

- The management guidance on margin decline of up to 15bps for FY14E is built into our estimates. The focus on credit book expansion in retail and MSME books would contain erosion in asset yield and margin. Further, deposit mobilization would stabilize CASA share; the bank plans to increase its CASA share by 100-125 bps to 32% mark.

- We expect the bank's loan book to grow at 16% CAGR for FY12-FY14E.

- The asset quality, though has taken a hit last few quarters, with the GNPAs now at 2.5% and restructured book at 7% of gross book. However the high provision buffer at 82% gives us the comfort.

Source : Equity Bulls

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