United Bank - Q1FY2014 Result Review - Angel Broking

United Bank reported weak operating performance for the quarter, primarily dragged by asset quality challenges. NII expectedly de-grew by 14.1% yoy to Rs. 587cr. Non-interest income grew strongly by 88.2% yoy to Rs. 405cr, probably boosted by treasury gains, thereby aiding moderate operating profit growth of 9.9% yoy to Rs. 600cr. On the asset quality front, the bank witnessed significant asset quality deterioration during the quarter, as Gross and Net NPA levels increased sequentially by 35% and 37%, respectively. Consequently, provisioning expenses for the bank grew by 73.3% yoy to Rs. 506cr, and earnings de-grew by 74.3% yoy to Rs. 45cr. We remain cautious on the asset quality performance for the banking sector going ahead, as we take into account recent macro developments and overall weak macro environment. Hence, we recommend a Neutral rating on the stock.

Source : Equity Bulls

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