Union Bank of India - 4QFY2013 Result Review - Angel Broking

Union Bank reported better than expected performance for the quarter. NII grew moderately by 5.5% yoy, while non-interest income grew by healthy 15.9% yoy, thereby resulting in moderate operating profit growth of 5.4% yoy, as against streets' expectation of a de-growth. On the asset quality front, the gross NPA levels were lower by around 1% qoq, however, due to 100bp qoq decline in PCR, the Net NPA levels were higher by 5.8% qoq. Provisioning expenses grew by 26.8% yoy and resulted in PBT level earnings decline of 4.9% yoy, however, aided by lower effective tax rate of 23.3% during the quarter as against 28.5% in 4QFY2012, the bank reported marginal earnings growth of 2.1% yoy.

At the CMP, the stock is trading at valuations of 0.7x FY2015E ABV. Hence, we recommend an Accumulate on the stock with a target price of Rs. 264.

Source : Equity Bulls

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