2QFY2012 Result Update | Banking
October 17, 2011
South Indian Bank ACCUMULATE
CMP `23
Performance Highlights Target Price `24
Particulars (` cr) 2QFY12 1QFY12 % chg (qoq) 2QFY11 % chg (yoy) Investment Period 12 months
NII 259 205 26.2 197 31.1
Pre-prov. profit 166 143 16.2 125 33.3 Stock Info
PAT 95 82 15.1 76 24.4 Sector Banking
Source: Company, Angel Research Market Cap (` cr) 2,627
For 2QFY2012, South Indian Bank (SIB) reported healthy net profit growth of Beta 0.9
24.4% yoy (15.1% qoq) to `95cr, better than our (`83cr) and street estimates 52 Week High / Low 30/17
(`88cr). NIM expansion coupled with lower slippages was the key highlight of the Avg. Daily Volume 9,09,682
results. We maintain our Accumulate recommendation on the stock. Face Value (`) 1
Healthy NIM expansion with improving asset quality: During 2QFY2012, the BSE Sensex 17,025
bank’s business growth moderated in-line with overall industry trends; however, Nifty 5,118
it remained comfortably ahead of the industry. Advances grew by 3.9% qoq Reuters Code SIBK.BO
vis-à-vis marginal 0.2% growth for the industry (up to September 23, 2011). Bloomberg Code SIB@IN
Deposits showed traction, rising by 4.5% qoq as compared to 0.8% growth for the
industry. CASA deposits grew by relatively lower 3.5% qoq, leading to a marginal
20bp qoq compression in CASA ratio to 21.3% (down from 23.9% in Shareholding Pattern (%)
2QFY2011). With the pass-through of higher interest rates and a larger share of Promoters -
higher-yielding gold loans, the bank was able to improve its yield on advances MF / Banks / Indian Fls 9.6
further by 36bp qoq and 150bp yoy to 12.1% (for 1HFY2012). With wholesale
FII / NRIs / OCBs 38.8
funding costs remaining largely stable, the bank’s cost of deposits went up only
Indian Public / Others 51.6
marginally (6bp qoq), leading to a healthy ~50bp qoq expansion in calculated
NIM for 2QFY2012. Asset quality was also largely stable during 2QFY2012, with
absolute gross and net NPAs declining by 2.5% and 8.2% qoq, respectively, and
Abs. (%) 3m 1yr 3yr
provision coverage ratio excluding technical write-offs improving to 74.7%.
Slippages surprised positively, coming in at just 0.5% (annualized) vis-à-vis 0.8% Sensex (8.3) (15.6) 60.9
in 1QFY2012 in spite of deterioration in the economic growth outlook. SIB (3.9) (14.4) 205.5
Outlook and valuation: SIB plans to raise ~`1,000cr in FY2012, which will
enable it to maintain its strong growth, especially in its gold loan business.
Currently, the stock is trading at moderate valuations of 1.1x FY13E ABV. In light
of capital raising and strong expansion plans, we value the bank at 1.2x FY2013E
ABV and maintain our Accumulate view on the stock with a target price of `24.
Key financials
Particulars (` cr) FY2010 FY2011 FY2012E FY2013E
NII 568 791 991 1,090
% chg 8.7 39.2 25.3 10.0 Vaibhav Agrawal
Net profit 234 293 379 391 022 – 3935 7800 Ext: 6808
% chg 20.0 25.1 29.7 3.1 vaibhav.agrawal@angelbroking.com
NIM (%) 2.5 2.8 2.9 2.7
Shrinivas Bhutda
EPS (`) 2.1 2.6 3.4 3.5
022 – 3935 7800 Ext: 6845
P/E (x) 11.2 9.0 6.9 6.7
shrinivas.bhutda@angelbroking.com
P/ABV (x) 1.8 1.6 1.3 1.1
RoA (%) 1.0 1.0 1.1 1.0 Varun Varma
RoE (%) 17.0 18.5 20.6 18.2 022 – 3935 7800 Ext: 6847
Source: Company, Angel Research varun.varma@angelbroking.com
Please refer to important disclosures at the end of this report 1
South Indian Bank | 2QFY2012 Result Update
Exhibit 1: 2QFY2012 performance
Particulars (` cr) 2QFY12 1QFY12 % chg (qoq) 2QFY11 % chg (yoy)
Interest earned 877 769 14.1 580 51.4
- on Advances / Bills 702 610 15.1 456 54.1
- on investments 152 144 5.2 116 30.2
- on balance with RBI and others 24 15 62.2 8 217.4
Interest expended 618 564 9.7 382 61.8
Net interest income 259 205 26.2 197 31.1
Other income 53 52 2.8 45 18.4
Other income excl. treasury 42 37 13.8 39 8.0
- Fee Income 7 9 (30.2) 9 (22.9)
- Treasury Income 11 15 (24.1) 6 82.6
- Others 35 27 28.9 30 16.8
Operating income 312 257 21.5 242 28.8
Operating expenses 146 113 28.2 117 24.0
- Employee expenses 88 69 27.0 77 13.3
- Other Opex 58 44 30.1 40 44.5
Pre-provision profit 166 143 16.2 125 33.3
Provisions & contingencies 24 21 14.3 7 249.9
- Provisions for NPAs 5 3 79.8 1 255.7
- Provisions for Investments 11 4 173.4 (3) (475.2)
- Provisions for Standard Assets 7 14 (46.4) 4 89.5
- Other Provisions 1 0 87.1 4 (86.8)
PBT 143 122 16.5 118 20.8
Provision for tax 48 40 19.5 42 14.1
PAT 95 82 15.1 76 24.4
Effective tax rate (%) 33.4 32.6 82bp 35.3 (196)bp
Source: Company, Angel Research
Exhibit 2: 2QFY2012 – Actual vs. Angel estimates
Particulars (` cr) Actual Estimates % chg
Net interest income 259 210 23.3
Non-interest income 53 49 8.3
Operating income 312 259 20.5
Operating expenses 146 121 20.1
Pre-prov. profit 166 138 20.8
Provisions and cont. 24 15 59.7
PBT 143 123 16.1
Prov. for taxes 48 40 19.4
PAT 95 83 14.5
Source: Company, Angel Research
October 17, 2011 2
South Indian Bank | 2QFY2012 Result Update
Exhibit 3: 2QFY2012 performance analysis
Particulars 2QFY12 1QFY12 % chg (qoq) 2QFY11 % chg (yoy)
Balance sheet
Advances (` cr) 23,017 22,151 3.9 17,718 29.9
Deposits (` cr) 33,038 31,622 4.5 25,060 31.8
Credit-to-deposit ratio (%) 69.7 70.0 (38)bp 70.7 (103)bp
Current deposits (` cr) 1,274 1,326 (3.9) 1,091 16.8
Saving deposits (` cr) 5,754 5,464 5.3 4,888 17.7
CASA deposits (` cr) 7,028 6,790 3.5 5,979 17.5
CASA ratio (%) 21.3 21.5 (20)bp 23.9 (259)bp
CAR (%) 13.5 13.5 (3)bp 15.9 (238)bp
Tier 1 CAR (%) 10.8 10.9 (6)bp 13.1 (228)bp
Profitability ratios (%)
Cost of deposits# 7.7 7.6 6bp 6.3 132bp
Yield on advances# 12.1 11.8 36bp 10.6 150bp
#
Reported NIM 3.0 2.8 20bp 3.0 (3)bp
Cost-to-income ratio 46.7 44.2 244bp 48.5 (181)bp
Asset quality
Gross NPAs (` cr) 231 236 (2.5) 228 1.2
Gross NPAs (%) 1.0 1.1 (8)bp 1.3 (28)bp
Net NPAs (` cr) 58 63 (8.2) 67 (13.1)
Net NPAs (%) 0.3 0.3 (4)bp 0.4 (13)bp
Provision coverage ratio (%) 74.7 73.1 156bp 70.5 417bp
Slippage ratio (%) 0.5 0.8 (30)bp 0.7 (12)bp
Loan loss provision to avg. assets (%) 0.1 0.0 2bp 0.0 3bp
Source: Company, Angel Research; Note: #Reported cumulative figures
Business growth moderates; but remains above industry
During 2QFY2012, the bank’s business growth moderated in-line with overall
industry trends; however, it remained comfortably ahead of the industry. Advances
grew by 3.9% qoq vis-à-vis marginal 0.2% growth for the industry (up to
September 23, 2011). Deposits showed traction, rising by 4.5% qoq as compared
to 0.8% growth for the industry. The bank’s CASA deposits grew by relatively lower
3.5% qoq, leading to a marginal 20bp qoq compression in CASA ratio to 21.3%
(down from 23.9% in 2QFY2011). CASA deposits and low-cost NRE deposits
constituted ~30% of total deposits. The bank is witnessing good traction in NRI
deposits on account of the recent sharp depreciation of INR vis-à-vis the USD.
Growth in gold loan portfolio continued to be healthy, registering a healthy 18.9%
increase on a sequential basis (robust 80% yoy growth). The share of gold loans in
the loan book has now increased to 26.2% (from 22.9% in 1QFY2012 and 18.8%
in 2QFY2011). On a sequential basis, excluding gold loans, the loan book
contracted marginally by 0.6%. With rising interest rates and a larger share of
higher-yielding gold loans, the bank was able to improve its yield on advances
further by 36bp qoq and 150bp yoy to 12.1% (for 1HFY2012). With wholesale
funding costs remaining benign, the bank’s cost of deposits went up only
marginally (6bp qoq), leading to a healthy ~50bp qoq expansion in calculated
October 17, 2011 3
South Indian Bank | 2QFY2012 Result Update
NIM for 2QFY2012. The expansion in NIM coupled with reasonable business
growth led to NII beating our estimates by a comfortable 23.3%.
Exhibit 4: Business growth remains healthy Exhibit 5: CASA continues at lower levels
Advances qoq growth (%,) Deposits qoq growth (%) (%)
12.0 26.0
23.9
10.0 22.4
23.0 21.5 21.5
8.0 21.3
6.0 20.0
4.0
17.0
10.1
2.0
4.9
7.4
8.3
7.7
6.8
8.1
6.4
3.9
4.5
- 14.0
2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12
Source: Company, Angel Research Source: Company, Angel Research
Exhibit 6: Reported NIM rises by 20bp qoq.... Exhibit 7: ...due to rise in yield on advances
(%) (%)
3.1 3.1 12.5 12.1
3.0 3.0
3.0 11.8
11.5
2.9 10.9
10.6 10.7
2.8 10.5
2.7
9.5
2.5 8.5
2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12
Source: Company, Angel Research; Note: Cumulative reported numbers Source: Company, Angel Research; Note: Cumulative reported numbers
Non-interest income growth driven by treasury gains
Other income growth on a yoy basis (18.2%) for the bank was primarily driven by
the sharp 82.6% rise in treasury gains. Fee income declined rather steeply (22.9%
yoy) despite healthy 29.9% yoy growth in advances. With interest rates having an
upward bias, we expect lower treasury gains in future.
Exhibit 8: Break-up of non-interest income
Particulars (` cr) 2QFY12 1QFY12 % chg (qoq) 2QFY11 % chg (yoy)
Fee income 7 9 (30.2) 9 (22.9)
Treasury gains 11 15 (24.1) 6 82.6
Profit on exchange transactions 7 5 37.2 5 47.4
Others 28 22 27.3 26 11.1
Non-interest income 53 52 2.9 45 18.2
Excluding treasury 42 37 13.9 39 7.9
Source: Company, Angel Research
October 17, 2011 4
South Indian Bank | 2QFY2012 Result Update
Asset quality surprises positively
The asset quality of the bank improved during 2QFY2012, with absolute gross and
net NPAs declining by 2.5% and 8.2% qoq, respectively. The gross NPA ratio
improved marginally to 1.0% from 1.1% in 1QFY2012. The provision coverage
ratio (excluding technical write offs) also improved further to 74.7% from 73.1% in
1QFY2012. Slippages surprised positively, coming in at just 0.5% (annualized)
vis-à-vis 0.8% in 1QFY2012 in spite of deterioration in the economic growth
outlook over the past few quarters. During 2QFY2012, the bank restructured four
MFI accounts of ~`81cr, taking cumulative restructured advances to ~`500cr.
The bank’s provision expenses increased five-fold on a yoy basis, primarily due to
provisioning expenses for investments (on account of hardening of yields) of `11cr
compared to a write-back of ~`3cr in 2QFY2011. Provisions for NPAs (including
those for restructured accounts) were higher at `5cr (`3cr in 1QFY2012).
Exhibit 9: NPA coverage comfortable at ~75% Exhibit 10: Slippages well within control
Gross NPAs (` cr) Net NPA (` cr) PCR (%, RHS) (%)
300 80.0 1.5
74.7 1.2
73.9 73.1
75.0 1.2
225 70.5 70.7
0.8 0.8
70.0 0.9
0.7
150 0.5
65.0 0.6
75
60.0 0.3
228
254
230
236
231
67
74
60
63
58
- 55.0 -
2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12
Source: Company, Angel Research Source: Company, Angel Research
Operating costs rise
Operating expenses increased sharply by 28.2% qoq, driven by a 27.0% increase
in employee expenses and a 30.1% rise in other operating expenses. The increase
in operating expenses was partly on account of certain one-offs pertaining to few
employees opting for employee benefits but also attributable to fresh hiring and
higher depreciation expenses on new properties acquired. Consequently, the
bank’s cost-to-income ratio rose to 46.7% from 44.2% in 1QFY2012.
Exhibit 11: Opex to average assets improves materially Exhibit 12: Cost-to-income ratio also improves
(%) (%)
2.0 1.8 50.0
1.6 1.6 48.5
1.6
1.5 1.3 47.5 46.7
45.7
1.0 45.0 43.9 44.2
0.5 42.5
- 40.0
2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12
Source: Company, Angel Research Source: Company, Angel Research
October 17, 2011 5
South Indian Bank | 2QFY2012 Result Update
Healthy capital adequacy
The bank’s capital adequacy ratio (CAR) stood at healthy 13.5% as of 2QFY2012,
with tier-I ratio at 10.8% (forming 80.1% of the total CAR). The bank had indicated
a comfortable tier-I CAR level of 14.0%. The bank is planning to raise ~`1,000cr
of equity capital during FY2012, which would further increase tier-I ratio, enabling
the bank to achieve its growth targets. As fund-raising timelines are not concrete
yet, we have not factored the same in our estimates at present. However,
if any QIP is done at the CMP, the book value as of FY2013E could see an
increase of ~4.0%.
Exhibit 13: Trends in CAR
(%) Tier-I CAR Tier-II CAR
20.0
15.9
14.9
16.0 14.0 13.5 13.5
2.8
2.6
12.0 2.7 2.7 2.7
8.0
13.1 12.3 11.3 10.9 10.8
4.0
-
2QFY11 3QFY11 4QFY11 1QFY12 2QFY12
Source: Company, Angel Research
Investment arguments
Strong business growth
The bank grew its advances and deposits at a strong rate of 27.1% and 29.2%
yoy, respectively, in FY2011. Business growth has further accelerated in
2QFY2012, with advances growing by 29.9% yoy and deposits rising by 31.8%
yoy. The bank’s gold loan portfolio has increased at an 84% CAGR over
FY2009-11 to reach `4,633cr. The gold loan portfolio has continued its pace in
2QFY2012 and now constitutes ~26% of the overall loan book. The bank had
indicated its plans to set up a gold loan NBFC to tap customers who are willing to
pay higher interest rates in lieu of higher LTVs and faster service. For this, the bank
was planning to deploy ~`300cr of the QIP proceeds towards the NBFC to
capitalize on the opportunity currently being exploited by players such as
Muthoot Finance and Mannapuram. However, the bank has put the gold loan
NBFC plan on hold as of now, considering the uncertain regulatory environment
for NBFCs.
The `1,000cr QIP amounts to 59.0% of FY2011 net worth, which will provide the
bank with substantial capital to maintain its strong growth. We have not factored in
the impact of raising ~`1,000cr funds at present; however, if any QIP is done at
the CMP, the book value as of FY2013E could see an increase of ~4.0%
October 17, 2011 6
South Indian Bank | 2QFY2012 Result Update
Outlook and valuation
The bank’s NIM rebounded in 2QFY2012 despite its relatively lower CASA
deposits base on the back of higher share of better-yielding gold loans. Going
forward, we believe the bank may be able to sustain its NIM at the current levels
on the back of better traction in low-cost NRI deposits (due to the recent sharp
depreciation of the INR) and increased focus on its gold loan portfolio. However,
on the asset-quality front, we believe going forward the bank may not be able to
sustain its NPAs at the current healthy levels and have conservatively factored in
higher slippages for FY2012 and FY2013 as compared to FY2011. That said, the
bank plans to raise ~`1,000cr during FY2012, which will enable it to maintain its
strong growth, especially in its gold loan business. Currently, the stock is trading at
moderate valuations of 1.1x FY2013E ABV. In light of capital raising and strong
expansion plans, we value the bank at 1.2x FY2013E ABV and maintain our
Accumulate rating on the stock with a target price of `24.
Exhibit 14: Key assumptions
Earlier estimates Revised estimates
Particulars (%)
FY2012 FY2013 FY2012 FY2013
Credit growth 19.0 19.0 22.0 19.0
Deposit growth 15.0 16.0 15.0 18.0
CASA ratio 21.6 21.5 21.6 21.1
NIMs 2.5 2.4 2.9 2.7
Other income growth 6.0 16.8 7.9 16.0
Growth in staff expenses 7.5 15.0 18.0 17.0
Growth in other expenses 15.0 15.0 28.0 17.0
Slippages 1.1 1.1 1.1 1.4
Treasury gain/(loss) (% of investments) 0.3 0.3 0.3 0.3
Source: Angel Research
Exhibit 15: Change in estimates
FY2012 FY2013
Particulars (` cr) Earlier Revised Earlier Revised
Var. (%) Var. (%)
estimates estimates estimates estimates
NII 863 991 14.8 933 1,090 16.9
Non-interest income 208 212 1.8 243 246 1.1
Operating income 1,072 1,203 12.3 1,176 1,336 13.6
Operating expenses 510 563 10.4 587 659 12.3
Pre-prov. profit 562 640 14.0 589 678 15.0
Provisions & cont. 68 79 16.2 77 99 28.4
PBT 494 562 13.7 513 579 13.0
Prov. for taxes 160 182 13.7 166 188 13.0
PAT 334 379 13.7 346 391 13.0
Source: Angel Research
October 17, 2011 7
South Indian Bank | 2QFY2012 Result Update
Exhibit 16: P/ABV band
Price (`) 0.5x 0.8x 1.1x 1.4x 1.7x
35
30
25
20
15
10
5
0
Oct-08
Feb-07
Feb-12
Sep-06
Nov-10
Sep-11
May-08
Jun-10
Dec-07
Jan-10
Apr-06
Jul-07
Apr-11
Aug-09
Mar-09
Source: Company, Angel Research
Exhibit 17: Recommendation summary
CMP Tgt. price Upside FY2013E FY2013E FY2013E FY2011-13E FY2013E FY2013E
Company Reco.
(`) (`) (%) P/ABV (x) Tgt P/ABV (x) P/E (x) EPS CAGR (%) RoA (%) RoE (%)
AxisBk Buy 1,120 1,426 27.2 1.81 2.3 9.4 20.4 1.5 20.8
FedBk Accumulate 386 422 9.2 1.1 1.2 8.0 18.3 1.2 13.8
HDFCBk Accumulate 478 517 8.3 3.23 3.5 16.9 29.3 1.7 20.6
ICICIBk* Buy 898 1,146 27.5 1.6 2.1 13.0 24.1 1.4 15.6
SIB Accumulate 23 24 5.3 1.1 1.2 6.7 15.6 1.0 18.2
YesBk Accumulate 289 321 11.0 1.8 2.1 9.8 18.9 1.2 20.6
AllBk Accumulate 154 174 12.9 0.7 0.8 4.3 8.9 0.9 17.7
AndhBk Neutral 121 - - 0.8 - 5.5 (0.9) 0.9 15.8
BOB Buy 759 943 24.3 1.0 1.3 5.7 10.6 1.1 19.6
BOI Accumulate 339 371 9.3 0.9 1.0 5.6 15.2 0.7 17.1
BOM Buy 47 57 21.7 0.6 0.8 4.4 31.8 0.6 15.1
CanBk Neutral 457 - - 0.9 - 5.3 (2.8) 0.9 17.1
CentBk Neutral 104 - - 0.7 - 5.1 (14.6) 0.5 14.2
CorpBk Buy 418 489 17.0 0.7 0.8 4.2 2.3 0.8 16.8
DenaBk Accumulate 76 81 6.0 0.6 0.6 3.7 5.8 0.8 16.2
IDBI# Neutral 106 - - 0.7 - 5.1 11.3 0.7 13.9
IndBk Accumulate 209 220 5.4 0.9 0.9 5.3 0.2 1.1 17.4
IOB Accumulate 99 104 5.1 0.6 0.7 4.0 20.3 0.6 15.9
J&KBk Neutral 809 - - 0.9 - 5.6 6.7 1.2 16.4
OBC Accumulate 305 325 6.4 0.7 0.8 5.3 5.4 0.8 13.9
PNB Buy 971 1,129 16.2 1.1 1.3 6.0 7.2 1.0 20.0
SBI* Buy 1,892 2,335 23.4 1.4 1.8 7.3 41.4 1.0 21.9
SynBk Buy 103 125 21.1 0.7 0.9 4.7 9.1 0.6 15.7
UcoBk Neutral 68 - - 0.8 - 4.2 14.0 0.6 16.5
UnionBk Accumulate 250 286 14.3 0.9 1.1 5.3 9.6 0.8 18.1
UtdBk Buy 73 91 25.0 0.6 0.8 4.4 11.7 0.6 13.8
VijBk Neutral 55 - - 0.7 - 6.7 (3.2) 0.4 10.5
#
Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), Without adjusting for SASF
October 17, 2011 8
South Indian Bank | 2QFY2012 Result Update
Income statement
Y/E March (` cr) FY07 FY08 FY09 FY10 FY11 FY12E FY13E
Net Interest Income 368 394 523 568 791 991 1,090
- YoY Growth (%) 18.5 7.2 32.7 8.7 39.2 25.3 10.0
Other Income 122 143 164 208 197 212 246
- YoY Growth (%) 68.1 17.3 15.2 26.9 (5.6) 7.9 16.0
Operating Income 489 537 687 777 988 1,203 1,336
- YoY Growth (%) 27.9 9.7 28.0 13.0 27.2 21.8 11.0
Operating Expenses 219 248 328 366 463 563 659
- YoY Growth (%) (1.4) 13.4 32.4 11.5 26.3 21.7 17.0
Pre - Provision Profit 270 289 359 411 525 640 678
- YoY Growth (%) 68.4 6.8 24.3 14.5 27.9 21.9 5.8
Prov. and Cont. 124 57 57 43 80 79 99
- YoY Growth (%) 41.5 (54.0) 0.7 (24.5) 84.4 (1.2) 25.1
Profit Before Tax 146 232 301 367 446 562 579
- YoY Growth (%) 100.7 58.3 30.0 21.9 21.3 26.1 3.1
Prov. for Taxation 42 80 107 134 153 182 188
- as a % of PBT 28.9 34.6 35.4 36.4 34.3 32.4 32.4
PAT 104 152 195 234 293 379 391
- YoY Growth (%) 89.5 45.6 28.4 20.0 25.1 29.7 3.1
Balance sheet
Y/E March (` cr) FY07 FY08 FY09 FY10 FY11 FY12E FY13E
Share Capital 70 90 113 113 113 113 113
Reserve & Surplus 654 1,071 1,191 1,372 1,734 2,035 2,347
Deposits 12,239 15,156 18,092 23,012 29,721 34,179 40,331
- Growth (%) 27.8 23.8 19.4 27.2 29.2 15.0 18.0
Borrowings 33 28 257 1 25 29 34
Tier 2 Capital 174 155 155 330 265 305 360
Other Liab. & Prov. 483 590 571 706 962 1,082 1,351
Total Liabilities 13,653 17,090 20,379 25,534 32,820 37,743 44,537
Cash balances 700 974 998 1,391 1,828 2,222 2,622
Bank balances 1,246 729 1,038 597 638 755 891
Investments 3,430 4,572 6,075 7,156 8,924 8,688 10,001
Advances 7,919 10,454 11,848 15,823 20,489 24,996 29,746
- Growth (%) 24.3 32.0 13.3 33.6 29.5 22.0 19.0
Fixed Assets 90 113 136 153 357 410 484
Other Assets 268 249 284 415 585 672 794
Total Assets 13,653 17,090 20,379 25,534 32,820 37,743 44,537
- Growth (%) 26.1 25.2 19.2 25.3 28.5 15.0 18.0
October 17, 2011 9
South Indian Bank | 2QFY2012 Result Update
Ratio Analysis
Y/E March FY07 FY08 FY09 FY10 FY11 FY12E FY13E
Profitability ratios (%)
NIMs 3.1 2.6 2.9 2.5 2.8 2.9 2.7
Cost to Income ratio 44.8 46.2 47.8 47.1 46.8 46.8 49.3
RoA 0.9 1.0 1.0 1.0 1.0 1.1 1.0
RoE 15.5 16.4 16.0 17.0 18.5 20.6 18.2
B/S ratios (%)
CASA ratio 23.9 24.1 23.8 23.1 21.5 21.6 21.1
Credit/Deposit ratio 64.7 69.0 65.5 68.8 68.9 73.1 73.8
Net worth/ Assets 18.2 16.6 15.4 16.7 18.4 19.1 19.1
CAR 11.1 13.8 14.8 15.4 14.0 12.9 12.6
- Tier I 8.8 12.1 13.2 12.4 11.3 10.6 10.4
Asset Quality (%)
Gross NPAs 3.9 1.8 2.2 1.3 1.1 0.9 0.8
Net NPAs 1.0 0.3 1.1 0.4 0.3 0.2 0.2
Slippages 2.2 0.7 1.6 1.5 0.7 1.1 1.4
NPA prov / avg. assets 0.7 0.1 0.1 0.2 0.1 0.1 0.2
Provision Coverage 75.8 82.0 48.4 70.8 73.9 74.5 73.9
Per Share Data (`)
EPS 1.5 1.7 1.7 2.1 2.6 3.4 3.5
ABVPS (75% cover) 10.0 12.6 10.8 12.9 15.0 17.7 20.4
DPS 0.2 0.3 0.3 0.4 0.5 0.6 0.6
Valuation Ratios
PER (x) 15.7 13.9 13.5 11.2 9.0 6.9 6.7
P/ABVPS (x) 2.3 1.8 2.2 1.8 1.6 1.3 1.1
Dividend Yield 1.1 1.3 1.3 1.7 2.2 2.6 2.6
DuPont Analysis
NII 3.0 2.6 2.8 2.5 2.7 2.8 2.7
(-) Prov. Exp. 1.0 0.4 0.3 0.2 0.3 0.2 0.2
Adj NII 2.0 2.2 2.5 2.3 2.4 2.6 2.4
Treasury 0.3 0.2 0.2 0.3 0.1 0.1 0.1
Int. Sens. Inc. 2.2 2.4 2.7 2.6 2.6 2.6 2.5
Other Inc. 0.7 0.7 0.7 0.6 0.5 0.5 0.5
Op. Inc. 3.0 3.1 3.4 3.2 3.1 3.2 3.0
Opex 1.8 1.6 1.8 1.6 1.6 1.6 1.6
PBT 1.2 1.5 1.6 1.6 1.5 1.6 1.4
Taxes 0.3 0.5 0.6 0.6 0.5 0.5 0.5
RoA 0.9 1.0 1.0 1.0 1.0 1.1 1.0
Leverage 18.2 16.6 15.4 16.7 18.4 19.1 19.1
RoE 15.5 16.4 16.0 17.0 18.5 20.6 18.2
October 17, 2011 10
South Indian Bank | 2QFY2012 Result Update
Research Team Tel: 022 - 39357800 E-mail: research@angelbroking.com Website: www.angelbroking.com
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Disclosure of Interest Statement South Indian Bank
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
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Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)
October 17, 2011 11