*Higher wage and credit-cost assumptions prompt us to lower our FY12-13e EPS for IOB by 4-5%.*
*Continuing macro headwinds (and thereby slower loan growth) and margin contraction. * ***Business growth healthy; NIM declines.** *Advances grew 44% yoy on the lower base (and 6.5% qoq) to `1.2trn. NIM declined ~30bps qoq on the ~260-bp contraction in CASA share and high cost of deposits. We expect growth in advances in FY12 to moderate to 21.5%, and NIM to decline 30bps yoy. *Productivity slipped due to prudent provisioning. *IOB has made provision of `270m in 1QFY12 (likely to continue) for the next round of wage revisions. Although this is likely to keep FY12 operating costs high, the benefits would be seen in FY13/14. *Asset quality stable.** *Asset quality was stable, with net NPA of 1.1% and healthy NPA coverage of 73.5%. NPA cost was high due to: i) higher NPA coverage of ~300bps despite a rise in gross NPA, by 6.5% qoq; ii) `1.5bn provided for the higher RBI provisioning requirement and iii) `410m (likely to recur every quarter, of the total liability of `3.4bn) provided to achieve 70% coverage on Sep '10 gross NPA. * * ** ***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."
