*Vijaya Bank’s weak 1QFY12 results lead us to lower our estimate of its FY12 and FY13 profit, 7.1% and 7%, respectively. On the lower RoE, we reduce our price target.*
*Modest business growth, NIM declines sharply. *Credit grew 22%, a percent ahead of deposit growth (21%). NIM fell 50bps qoq to 2.37%, led by a 125bps qoq drop in CASA share to 24%. Ahead, NIM is unlikely to slip, led by the bank’s low credit-to-deposits (67.4%) and a likely fall in wholesale deposit rates. We estimate NIM over FY12-13 at ~2.6% and expect a steady 22% CAGR in the bank’s credit over FY11-13, higher than in the past. *High slippage, one-off provisions dent profits. *Across sectors, slippage rose 53% qoq, to Rs6.1bn (4.8% of loans). Provisioning came higher as the bank had made additional NPA provisions (Rs1.08bn) in keeping with the RBI-mandated higher provisioning norms. Also, it had to provide Rs770m on its treasury portfolio due to the high interest rate prevailing in the system, which could be reversed if G-Sec yields fall. The bank has fully shifted to the system-based NPA and management expects better recoveries to sustain asset quality from further impairment. *Risks. H*igher-than-expected delinquencies would lead to higher-than-expected credit costs. *Safe Harbor Statement:* *Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.* ** *Nothing in this article is, or should be construed as, investment advice.** * ** * * ** ** -- For Anything related with Stock market be Online at http://www.niftyviews.com/ Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234 FOR TRIAL STOCK/NIFTY/OPTION CALLS You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group. To post to this group, send an email to [email protected] To unsubscribe email [email protected] for more info visit http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB . This is Not a Spam Mail. Disclaimer :- "The opinions expressed by the members on this board are based on their individual experience and perceptions and to share information with other members with the best of intentions to help fellow members in investment decisions as equity investment is a risky venture."
