Indian Overseas Bank by mnmgroup

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									                                                                                              4QFY2012 Result Update | Banking
                                                                                                                           May 9, 2012



 Indian Overseas Bank                                                                       BUY
                                                                                            CMP                                     `82
 Performance Highlights                                                                     Target Price                           `101
  




 Particulars (` cr)         4QFY12     3QFY12        % chg (qoq)   4QFY11    % chg (yoy)    Investment Period              12 Months
 NII                          1,341       1,222             9.7     1,215          10.3
                                                                                            Stock Info
 Pre-prov. profit             1,002         822            21.9       977           2.6
                                529         108           388.4       434          21.8     Sector                                Banking
 PAT
 Source: Company, Angel Research                                                            Market Cap (` cr)                      6,543

 Indian Overseas Bank (IOB) reported net profit growth of 21.8% yoy, mainly on              Beta                                      1.1
 account of a lower effective tax rate of 14.0% (due to tax write-back) and lower           52 Week High / Low                    157/73
 provisioning. Net profit came well ahead of our expectation, on account of lower           Avg. Daily Volume                     97,738
 provision coverage ratio and our anticipation of lower growth in operating income.
                                                                                            Face Value (`)                            10
 We maintain our Buy view on the stock with a target price of `101.
                                                                                            BSE Sensex                            16,480
 Strong business growth; but asset quality remain under pressure: During
                                                                                            Nifty                                  4,975
 4QFY2012, the banks’ domestic business momentum was stronger than the system,
 with growth in advances and deposits coming at 23.6% and 22.7% yoy,                        Reuters Code                      IOBK.BO
 respectively. CASA deposits growth rate stood at moderate 8.8% yoy, driven by              Bloomberg Code                    IOB@IN
 8.8% yoy growth in more volatile current deposits and subdued 4.1% yoy growth in
 Savings deposits. Non-interest income growth was healthy at 23.4% yoy to `437cr,
 with growth coming from all sections. The cost of deposits for the bank went up by         Shareholding Pattern (%)
 18bp sequentially to 7.5%. The qoq rise in yield on funds (22bp to 10.0%),
                                                                                            Promoters                               69.6
 however, managed to fully offset the impact of increase in cost of funds (12bp qoq
 to 7.4%), resulting in sequential improvement in reported NIMs by 13bps to 2.7%.           MF / Banks / Indian Fls                 14.4
 Though, the banks’ gross NPA ratio declined to 2.7% from 3.0% in 3QFY2012,                 FII / NRIs / OCBs                         4.2
 annualized slippage ratio stood at a high of 3.6%. Bank provisioning for NPA,
                                                                                            Indian Public / Others                  11.8
 standard assets and restructured assets decreased by 37.3% qoq (11.5% yoy) to
 `355cr. The net NPA ratio for the bank stood at 1.35% (1.23% in 3QFY2012). PCR
 (incl. technical write-off) dipped by 402bp qoq to 67.7%. If the bank had
 maintained its PCR, the PBT would have lower by `237cr (38.5%). In addition to             Abs. (%)              3m       1yr        3yr
 this, the bank restructured loans amounting to `3,170cr during the quarter, taking         Sensex               (7.6)   (11.1)     38.8
 the outstanding restructured book to `12,641cr (9.0% of total advances).
                                                                                            IOB                 (18.1)   (46.4)     34.7
 Outlook and valuation: The bank had faced substantial asset quality issues in FY2010
 due to which RoEs were depressed to 11.5%. From this low base, we expect RoEs to
 improve to 13.9% in FY2014E, driven by 28.2% CAGR in earnings over FY2012-14E.
 However, we also remain wary of further incremental asset quality pressures that
 could arise due to bank’s continued aggressive lending even in FY2012. At the CMP,
 the stock is trading at cheap valuations, in our view, of 0.5x FY2014E P/ABV. Hence,
 we recommend a Buy rating on the stock with a target price of `101, valuing the stock
 at 0.6x FY2014E ABV.
 Key financials
 Y/E March (` cr)                         FY2011       FY2012      FY2013E   FY2014E
 NII                                        4,208        5,016       5,642      6,386      Vaibhav Agrawal
 % chg                                       35.1         19.2        12.5        13.2     022 – 3935 7800 Ext: 6808
 Net profit                                 1,073        1,050       1,295      1,727      vaibhav.agrawal@angelbroking.com
 % chg                                       51.7         (2.1)       23.3        33.4
 NIM (%)                                       2.8         2.6         2.5         2.4     Varun Varma
 EPS (`)                                     17.3         13.2        16.2       21.7      022 – 3935 7800 Ext: 6847
                                                                                           varun.varma@angelbroking.com
 P/E (x)                                       4.7         6.2         5.1         3.8
 P/ABV (x)                                     0.6         0.6         0.6         0.5
                                                                                           Sourabh Taparia
 RoA (%)                                       0.7         0.5         0.5         0.6
                                                                                           022 – 3935 7800 Ext: 6872
 RoE (%)                                     14.8         11.1        11.5       13.9
                                                                                           sourabh.taparia@angelbroking.com
 Source: Company, Angel Research
Please refer to important disclosures at the end of this report                                                                        1
                                           Indian Overseas Bank | 4QFY2012 Result Update



              Exhibit 1: 4QFY2012 performance
              Particulars (` cr)                4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy)
              Interest earned                    4,911     4,604            6.7      3,532           39.1
              - on Advances / Bills              3,741     3,513            6.5      2,616           43.0
              - on investments                   1,050     1,013            3.7       823            27.6
              - on balance with RBI & others        77         79         (1.4)        68            14.2
              - on others                           43             -          -        25            70.3
              Interest Expended                  3,571     3,383            5.6      2,317           54.1
              Net Interest Income                1,341     1,222            9.7      1,215           10.3
              Other income                         504       411           22.5       384            31.0
              Other income excl. treasury          437       376           16.1       354            23.3
              - Fee Income                         268       237           13.1       228            17.5
              - Treasury Income                     67         35          91.4        30           121.1
              - Recov. from written off a/cs        56         21        166.7         46            21.7
              - Others                             113       118          (4.6)        80            40.5
              Operating income                   1,844     1,633           13.0      1,600           15.3
              Operating expenses                   842       810            3.9       623            35.2
              - Employee expenses                  508       546          (6.9)       363            40.1
              - Other Opex                         334       264           26.1       260            28.2
              Pre-provision Profit               1,002       822           21.9       977             2.6
              Provisions & Contingencies           388       667         (41.9)       446           (13.1)
              - Provisions for NPAs                277       295          (6.1)       305            (9.2)
              - Provisions for Investments         (64)        84       (176.5)        42         (254.8)
              - Other Provisions                   175       288         (39.3)       100            75.8
              PBT                                  615       155         296.9        531            15.8
              Provision for Tax                     86         47          84.4        97           (11.1)
              PAT                                  529       108         388.4        434            21.8
              Effective Tax Rate (%)              14.0       30.1      (1611)bp       18.2        (422)bp
              Source: Company, Angel Research


              Exhibit 2: Actual vs. Angel estimates
               Particulars (` cr)                         Actual         Estimates           Variation (%)
              NII                                         1,341             1,260                     6.4
              Non-Interest Income                           504               445                    13.1
              Operating Income                            1,844             1,706                     8.1
              Operating Expenses                            842               842                    (0.0)
              Pre-Prov. Profit                            1,002               864                    16.1
              Provisions & Cont.                            388               486                  (20.3)
              PBT                                           615               377                    63.1
              Prov. for Taxes                                86               125                  (31.0)
              PAT                                           529               252                  109.5
              Source: Company, Angel Research




May 9, 2012                                                                                              2
                                            Indian Overseas Bank | 4QFY2012 Result Update



              Exhibit 3: 4QFY2012 performance
              Particulars (` cr)                4QFY12    3QFY12   % chg (qoq)   4QFY11 % chg (yoy)
              Advances (` cr)                   140,724 132,549           6.2 111,833          25.8
              Deposits (` cr)                   178,434 167,006           6.8 145,229          22.9
              Credit-to-Deposit Ratio (%)          78.9     79.4       (50)bp       77.0     186bp
              Current deposits (` cr)            12,287   10,300         19.3    11,806         4.1
              Saving deposits (` cr)             34,862   33,376          4.5    32,056         8.8
              CASA deposits (` cr)               47,149   43,676          8.0    43,861         7.5
              CASA ratio (%)                       26.4     26.2         27bp       30.2    (378)bp
              CAR (%)                              13.3     11.8       148bp        14.6    (123)bp
              Tier 1 CAR (%)                        8.4      6.7       167bp         8.2      19bp
              Profitability Ratios (%)
              Cost of deposits                      7.5      7.3         18bp        6.0     150bp
              Yield on advances                    10.9     10.8         13bp        9.9     109bp
              Yield on investments                  7.4      7.4          3bp        7.2      18bp
              Yield on funds                       10.0      9.8         22bp        9.2      83bp
              Cost of funds                         7.4      7.2         12bp        6.1     127bp
              Reported NIM                          2.7      2.6         13bp        3.2     (42)bp
              Cost-to-income ratio                 45.6     49.6      (398)bp       38.9     672bp
              Asset quality
              Gross NPAs (` cr)                   3,920    3,972         (1.3)    3,090        26.9
              Gross NPAs (%)                        2.7      3.0       (26)bp        2.7       2bp
              Net NPAs (` cr)                     1,907    1,600         19.2     1,328        43.6
              Net NPAs (%)                          1.4      1.2         12bp        1.2      16bp
              Provision Coverage Ratio (%)         67.7     71.7      (402)bp       70.5    (277)bp
              Slippage ratio (%)                    3.6      2.5       118bp         4.4     (78)bp
              NPA to avg. assets (%)                0.5      0.6         (6)bp       0.7     (21)bp
              Source: Company, Angel Research


              Healthy business growth continues; NIMs improves by 13bp qoq

              During 4QFY2012, the banks’ domestic business momentum was stronger than
              the system, with growth in advances and deposits coming at 23.6% and 22.7%
              yoy, respectively. Consequently CD ratio for the bank improved from 77.0% in
              4QFY2011 to 78.9% in 4QFY2012.

              On the liability side, growth in deposits was primarily driven by 29.5% yoy growth
              in term deposits. CASA deposits growth rate stood at moderate 8.8% yoy, driven
              by 8.8% yoy growth in the more volatile current account deposits and subdued
              4.1% yoy growth in Savings account deposits. Consequently, CASA ratio contracted
              by 378bps yoy (improved slightly on qoq basis by 27bps) to 26.4%

              Despite the slight improvement in CASA ratio on a sequential basis, overall tight
              liquidity situation prevalent during the quarter lead to 18bps qoq rise in cost of
              deposits to 7.5%. The qoq rise in yield on funds (22bp to 10.0%), however,
              managed to fully offset the impact of increase in cost of funds (12bp qoq to 7.4%),
              resulting in improvement in reported NIM sequentially by 13bps to 2.7%.




May 9, 2012                                                                                       3
                                                                                      Indian Overseas Bank | 4QFY2012 Result Update



Exhibit 4: Overall business growth remain healthy                             Exhibit 5: CASA ratio declines by 378bp yoy
         Adv. yoy chg (%)          Dep. yoy chg (%)          CDR (%, RHS)                         CASA ratio                 CASA yoy growth (%, RHS)
  50.0                                                              85.0       32.0        21.7                                                                24.0
                       78.8                    79.4      78.9
  40.0      77.0                   76.1                             80.0       24.0                                                                            18.0
                                                                                                        14.9          14.9
                                                                                                                                   12.8
  30.0                                                              75.0
                                                                               16.0                                                                            12.0
  20.0                                                              70.0                                                                         7.5

                                                                                8.0                                                                            6.0
            41.6
            31.1


                      43.6
                      38.1


                                   44.2
                                   38.5


                                               32.4
                                               33.5


                                                         25.8
                                                         22.9




                                                                                           30.2



                                                                                                         27.6



                                                                                                                      27.5



                                                                                                                                    26.2



                                                                                                                                                 26.4
  10.0                                                              65.0

    -                                                               60.0         -                                                                             -
          4QFY11 1QFY12 2QFY12 3QFY12 4QFY12                                           4QFY11        1QFY12       2QFY12         3QFY12        4QFY12

Source: Company, Angel Research                                               Source: Company, Angel Research


Exhibit 6: Yield on funds increase by 22bps qoq which...                      Exhibit 7: ...negated the rise in cost of funds, NIMs up 13bps qoq
   (%)                                                                          (%)
 12.00
                                                                               3.60
                                        9.92          9.81        10.03
                            9.59                                                           3.16
 10.00       9.20                                                              3.20
                                                                                                         2.85           2.86
                                                                                                                                                        2.74
                                                                               2.80                                                     2.61
  8.00
                                                                               2.40
  6.00
                                                                               2.00

  4.00                                                                         1.60
           4QFY11      1QFY12        2QFY12       3QFY12        4QFY12                  4QFY11          1QFY12        2QFY12        3QFY12           4QFY12

Source: Company, Angel Research                                               Source: Company, Angel Research


                                                        Healthy fee income growth for 4QFY2012

                                                        Non-interest income growth was healthy at 23.4% yoy to `437cr, with growth
                                                        coming from all sections. Growth in fee income was healthy at 17.5% yoy to
                                                        `268cr. Treasury income more than doubled on a yoy basis to 67cr, while
                                                        recoveries improved by 21.7% yoy to `56cr.

                                                        Exhibit 8: Break-up of non-interest income
                                                         Particulars (` cr)                4QFY12 3QFY12              % chg (qoq) 4QFY11                % chg (yoy)
                                                         Fee income                               268           237             13.1           228              17.5
                                                         Treasury                                  67            35             91.4            30             121.1
                                                         Recoveries from written-off a/c           56            21           166.7             46              21.7
                                                         Others                                   113           118             (4.2)           80              40.9
                                                         Other income                             504           411             22.6           385              31.1
                                                         Other income excl. treasury              437           376             16.2           354              23.4
                                                         Source: Company, Angel Research




May 9, 2012                                                                                                                                                          4
                                                                              Indian Overseas Bank | 4QFY2012 Result Update



                                                   Asset quality remain under pressure

                                                   The bank’s asset quality remained under pressure during 4QFY2012. Though,
                                                   the banks’ gross NPA ratio declined to 2.74% from 3.0% in 3QFY2012. The
                                                   slippages for the quarter stood at much higher `1,015cr (annualized slippage
                                                   ratio of 3.6% compared to 2.4% in 3QFY2012), with major contribution from
                                                   sectors like textile, engineering, other metals and agriculture. Due to banks’
                                                   recent complete switchover to system driven NPA recognition platform,
                                                   recoveries and upgrades were higher during the quarter at `448cr as against
                                                   `285cr in 3QFY2012. Bank provisioning for NPA, standard assets and
                                                   restructured assets decreased by 37.3% qoq (11.5% yoy) to `355cr. The net
                                                   NPA ratio for the bank stood at 1.35% (1.23% in 3QFY2012). PCR (incl.
                                                   technical write-off) dipped by 402bp qoq to 67.7%. If the bank had maintained
                                                   its PCR, the PBT would have lower by `237cr (38.5%).

                                                   In addition to this, the bank restructured loans amounting to `3,170cr during the
                                                   quarter, taking the outstanding restructured book to `12,641cr (9.0% of total
                                                   advances). Major accounts, which were restructured during the quarter, included
                                                   Air India and state discoms. The bank will take an NPV hit on Air India
                                                   restructuring from 1QFY2013), while they clarified that there would be no NPV loss
                                                   on restructuring of state discoms.


Exhibit 9: Slippage ratio of 3.6% in 4QFY2012                        Exhibit 10: PCR decline by 402bps qoq
                  Slippages (%)         Credit cost (%, RHS)                    Gross NPAs (%)           Net NPAs (%)    PCR (%, RHS)
 5.0                                                           1.2      4.5                                                     80.0
                     1.0          1.0                                                      73.5
                                                                                 70.5                   71.8     71.7
 4.0                                                                    3.6                                             67.7
          0.7                                                  0.9                                                              70.0
 3.0                                       0.6                          2.7
                                                        0.5
                                                               0.6                                                              60.0
 2.0                                                                    1.8
                                                               0.3                                                              50.0
 1.0                                                                    0.9
          4.4




                     1.7




                                  3.6




                                           2.5




                                                        3.6




                                                                                2.7
                                                                                1.2


                                                                                          2.8
                                                                                          1.1


                                                                                                    3.1
                                                                                                    1.2


                                                                                                                 3.0
                                                                                                                 1.2


                                                                                                                        2.7
                                                                                                                        1.4
  -                                                            -         -                                                      40.0
       4QFY11      1QFY12     2QFY12    3QFY12       4QFY12                    4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

Source: Company, Angel Research                                       Source: Company, Angel Research


                                                   Investment arguments
                                                   Pace in business, but with its share of pain

                                                   The pace of business growth for the bank picked up in 2HFY2011 and even
                                                   continued in FY2012, despite of domestic macro headwinds. Going by
                                                   management’s indication, growth momentum is likely to continue in FY2013 as
                                                   well. The strong momentum witnessed in advances as well as deposits since
                                                   4QFY2011 has been marred by high slippages. Gross annualized slippage rates
                                                   further increased from 1.7%, 1.5% (excl. system driven NPAs) and 2.5% in
                                                   1QFY2012, 2QFY2012 and 3QFY2012, respectively to 3.6% in 4QFY2012. In
                                                   addition, the banks’ restructured book has grown by ~33.3% during the quarter.




May 9, 2012                                                                                                                             5
                                          Indian Overseas Bank | 4QFY2012 Result Update



              Outlook and valuation

              The bank had faced substantial asset quality issues in FY2010 due to which RoEs
              were depressed to 11.5%. From this low base, we expect RoEs to improve to 13.9%
              in FY2014E, driven by 28.2% CAGR in earnings over FY2012-14E. However, we
              also remain wary of further incremental asset quality pressures that could arise due
              to bank’s continued aggressive lending even in FY2012. At the CMP, the stock is
              trading at cheap valuations, in our view, of 0.5x FY2014E P/ABV. Hence, we
              recommend a Buy rating on the stock with a target price of `101, valuing the stock
              at 0.6x FY2014E ABV.


              Exhibit 11: Key assumptions
                                                             Earlier estimates                Revised estimates
              Particulars (%)
                                                         FY2013          FY2014              FY2013       FY2014
              Credit growth                                   22.0           13.0              11.5          14.0
              Deposit growth                                  24.0           17.0              15.0          15.0
              CASA ratio                                      27.5           26.1              25.6          25.0
              NIMs                                             2.6               2.4             2.5              2.4
              Other income growth                             32.9               5.3             1.8         10.8
              Growth in staff expenses                        22.0           15.0              13.0          13.0
              Growth in other expenses                        23.0           15.0              13.0          13.0
              Slippages                                        3.2               3.0             2.6              2.5
              Source: Angel Research


              Exhibit 12: Change in estimates
                                                    FY2013                                   FY2014
              Particulars (` cr)          Earlier      Revised                  Earlier         Revised
                                                               Var. (%)                                 Var. (%)
                                       estimates     estimates               estimates        estimates
              NII                         5,627        5,642          0.3         6,384           6,386       0.0
              Non-interest income         1,701        1,712          0.6         1,880           1,896       0.9
              Operating income            7,328        7,354          0.4         8,264           8,283       0.2
              Operating expenses          3,575        3,574         (0.0)        4,039           4,039     (0.0)
              Pre-prov. profit            3,753        3,780          0.7         4,225           4,244       0.5
              Provisions & cont.          1,825        1,863          2.1         1,661           1,687       1.5
              PBT                         1,928        1,917         (0.6)        2,563           2,557     (0.2)
              Prov. for taxes               626          622         (0.6)             832         830      (0.2)
              PAT                         1,303        1,295         (0.6)        1,732           1,727     (0.2)
              Source: Angel Research




May 9, 2012                                                                                                        6
                                                                                                       Indian Overseas Bank | 4QFY2012 Result Update



                                                         Exhibit 13: P/ABV band
                                                                              Price (`)                  0.4x                     0.8x                   1.2x                 1.6x                 2x
                                                          350

                                                          300

                                                          250

                                                          200

                                                          150

                                                          100

                                                           50

                                                             0
                                                                 Apr-06




                                                                                     Apr-07




                                                                                                        Apr-08




                                                                                                                             Apr-09




                                                                                                                                                Apr-10




                                                                                                                                                                     Apr-11




                                                                                                                                                                                        Apr-12
                                                                           Oct-06




                                                                                              Oct-07




                                                                                                                   Oct-08




                                                                                                                                       Oct-09




                                                                                                                                                          Oct-10




                                                                                                                                                                              Oct-11




                                                                                                                                                                                                 Oct-12
                                                         Source: Company; Angel Research


Exhibit 14: Recommendation summary
                                  CMP      Tgt. price    Upside           FY2014E                 FY2014E                   FY2014E              FY2012-14E                   FY2014E            FY2014E
Company      Reco.
                                   (`)             (`)      (%)           P/ABV (x)           Tgt P/ABV (x)                   P/E (x)           EPS CAGR (%)                   RoA (%)            RoE (%)
AxisBk        Buy                  963        1,587        64.8                     1.3                          2.2                  6.9                          16.4                1.5                20.3
FedBk         Neutral              406              -             -                 1.0                            -                  7.1                          13.0                1.3                14.5
HDFCBk        Accumulate           512           567       10.6                     2.9                          3.3              14.4                             27.0                1.7                22.1
ICICIBk*      Buy                  822        1,201        46.2                     1.3                          1.9              10.1                             20.4                1.5                16.0
SIB           Neutral               23              -             -                 1.1                            -                  6.1                           4.5                0.8                17.5
YesBk         Buy                  320           470       46.7                     1.6                          2.4                  7.7                          22.5                1.4                23.3
AllBk         Accumulate           150           166       10.8                     0.6                          0.7                  3.6                           6.2                0.9                17.6
AndhBk        Neutral              110              -             -                 0.7                            -                  4.3                           3.3                0.9                16.0
BOB           Buy                  641           925       44.3                     0.7                          1.1                  4.3                          11.1                1.1                18.2
BOI           Buy                  353           411       16.3                     0.7                          1.0                  4.4                          23.3                0.8                16.9
BOM           Buy                   48            60       24.0                     0.6                          0.7                  3.6                          26.8                0.9                17.5
CanBk         Buy                  407           532       30.7                     0.7                          0.9                  4.3                          10.9                0.9                16.7
CentBk        Neutral               78              -             -                 0.7                            -                  3.9                          45.7                0.5                13.8
CorpBk        Buy                  400           504       25.9                     0.5                          0.7                  3.6                           5.3                0.8                16.5
DenaBk        Buy                   85           118       39.2                     0.5                          0.7                  3.3                           6.2                0.9                16.9
IDBI#         Buy                   92           117       27.3                     0.5                          0.7                  3.8                          22.7                0.9                14.8
IndBk         Buy                  194           240       23.7                     0.7                          0.8                  4.0                           5.4                1.2                18.2
IOB           Buy                   82           101       23.1                     0.5                          0.6                  3.8                          28.3                0.6                13.9
J&KBk         Neutral              856              -             -                 0.8                            -                  4.4                           8.8                1.4                18.6
OBC           Buy                  218           285       31.0                     0.5                          0.6                  3.4                          27.7                0.8                14.3
PNB           Buy                  768        1,066        38.8                     0.8                          1.1                  4.4                          10.3                1.0                18.1
SBI*          Buy                1,888        2,593        37.4                     1.2                          1.6                  7.0                          23.6                1.0                19.1
SynBk         Buy                   92           128       40.3                     0.5                          0.8                  3.3                           8.7                0.8                17.1
UcoBk         Neutral               67              -             -                 0.7                            -                  4.7                           7.0                0.5                13.4
UnionBk       Buy                  203           270       33.1                     0.7                          0.9                  3.9                          27.3                0.9                18.1
UtdBk         Buy                   59            85       42.7                     0.4                          0.6                  2.7                          11.4                0.7                15.9
VijBk         Neutral               54              -             -                 0.6                            -                  4.4                          13.5                0.5                13.7
Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF




May 9, 2012                                                                                                                                                                                                 7
                                         Indian Overseas Bank | 4QFY2012 Result Update



              Income statement
              Y/E March (` cr)             FY09      FY10       FY11     FY12     FY13E     FY14E
              Net Interest Income         2,870     3,114      4,208    5,016     5,642      6,386
              - YoY Growth (%)              7.1       8.5       35.1     19.2      12.5       13.2
              Other Income                1,713     1,197      1,225    1,681     1,712      1,896
              - YoY Growth (%)             59.3     (30.2)       2.4     37.2       1.8       10.8
              Operating Income            4,583     4,311      5,433    6,697     7,354      8,283
              - YoY Growth (%)             22.0      (5.9)      26.0     23.3       9.8       12.6
              Operating Expenses          1,942     2,466      2,573    3,163     3,574      4,039
              - YoY Growth (%)             30.7      27.0        4.3     23.0      13.0       13.0
              Pre - Provision Profit      2,641     1,845      2,861    3,534     3,780      4,244
              - YoY Growth (%)             16.4     (30.2)      55.1     23.5       7.0       12.3
              Prov. & Cont.                 687       866      1,268    2,236     1,863      1,687
              - YoY Growth (%)             11.7      26.1       46.5     76.3     (16.7)      (9.5)
              Profit Before Tax           1,954       979      1,592    1,298     1,917      2,557
              - YoY Growth (%)             18.1     (49.9)      62.7    (18.5)     47.7       33.4
              Prov. for Taxation            629       272        520     248       622        830
              - as a % of PBT              32.2      27.8       32.6     19.1      32.4       32.4
              PAT                         1,326       707      1,073    1,050     1,295      1,727
              - YoY Growth (%)             10.3     (46.7)      51.7     (2.1)     23.3       33.4



              Balance sheet
              Y/E March (` cr)           FY09      FY10        FY11      FY12     FY13E     FY14E
              Share Capital               545       545         619        797      797       797
              Reserves & Surplus         6,606     6,980       8,706    11,131    12,148    13,505
              Deposits                 100,116 110,795       145,229   178,434   205,199   235,979
              - Growth (%)                18.7      10.7        31.1      22.9      15.0      15.0
              Borrowings                 6,548     4,111      12,517    15,369    17,599    20,177
              Tier 2 Capital             3,946     4,871       6,838     8,245     9,193    10,480
              Other Liab. & Prov.        3,312     3,795       4,875     5,546     6,432     7,253
              Total Liabilities        121,073 131,097       178,784   219,522   251,367   288,190
              Cash Balances              5,940     7,666      10,011    12,199     8,208     9,439
              Bank Balances              4,981     2,158       2,008     4,062     4,651     5,333
              Investments               31,215    37,651      48,610    55,566    73,679    85,528
              Advances                  74,885    79,004     111,833   140,724   156,908   178,875
              - Growth (%)                23.9       5.5        41.6      25.8      11.5      14.0
              Fixed Assets               1,710     1,700       1,681     1,744     1,937     2,154
              Other Assets               2,341     2,918       4,641     5,226     5,984     6,861
              Total Assets             121,073 131,097       178,784   219,522   251,367   288,190
              - Growth (%)                18.9       8.3        36.4      22.8      14.5      14.6




May 9, 2012                                                                                      8
                                         Indian Overseas Bank | 4QFY2012 Result Update



              Ratio analysis
              Y/E March                           FY09    FY10   FY11    FY12    FY13E   FY14E
              Profitability ratios (%)
              NIMs                                  2.7    2.6     2.8     2.6     2.5     2.4
              Cost to Income Ratio                 42.4   57.2    47.3    47.2    48.6    48.8
              RoA                                   1.2    0.6     0.7     0.5     0.5     0.6
              RoE                                  24.8   11.5    14.8    11.1    11.5    13.9
              B/S ratios (%)
              CASA Ratio                           30.3   32.5    30.2    26.4    25.6    25.0
              Credit/Deposit Ratio                 74.8   71.3    77.0    78.9    76.5    75.8
              CAR                                  12.7   14.8    14.6    15.3    14.8    14.5
              - Tier I                              7.6    8.7     8.2     8.8     8.4     8.1
              Asset Quality (%)
              Gross NPAs                            2.5    4.5     2.7     2.7     3.9     4.7
              Net NPAs                              1.3    2.5     1.2     1.4     1.5     1.6
              Slippages                             3.7    4.1     2.7     2.8     2.6     2.5
              Loan Loss Prov./Avg. Assets           0.3    0.7     0.7     0.7     0.7     0.6
              Provision Coverage                   48.0   54.0    67.9    67.7    71.2    71.5
              Per Share Data (`)
              EPS                                  24.3   13.0    17.3    13.2    16.2    21.7
              ABVPS                                99.5   97.7   126.8   129.7   144.0   160.4
              DPS                                   4.5    3.5     5.0     2.5     3.0     4.0
              Valuation Ratios
              PER (x)                               3.4    6.3     4.7     6.2     5.1     3.8
              P/ABVPS (x)                           0.8    0.8     0.6     0.6     0.6     0.5
              Dividend Yield                        5.5    4.3     6.1     3.0     3.7     4.9
              DuPont Analysis (%)
              NII                                   2.6    2.5     2.7     2.5     2.4     2.4
              (-) Prov. Exp.                        0.6    0.7     0.8     1.1     0.8     0.6
              Adj. NII                              2.0    1.8     1.9     1.4     1.6     1.7
              Treasury                              0.6    0.2     0.1     0.1     0.0     0.0
              Int. Sens. Inc.                       2.5    2.0     2.0     1.5     1.6     1.8
              Other Inc.                            1.0    0.7     0.7     0.8     0.7     0.7
              Op. Inc.                              3.5    2.7     2.7     2.2     2.3     2.4
              Opex                                  1.7    2.0     1.7     1.6     1.5     1.5
              PBT                                   1.8    0.8     1.0     0.7     0.8     0.9
              Taxes                                 0.6    0.2     0.3     0.1     0.3     0.3
              RoA                                   1.2    0.6     0.7     0.5     0.5     0.6
              Leverage (x)                         20.9   20.5    21.4    21.0    20.9    21.6
              RoE                                  24.8   11.5    14.8    11.1    11.5    13.9




May 9, 2012                                                                                 9
                                                                              Indian Overseas Bank | 4QFY2012 Result Update




  Research Team Tel: 022 - 39357800                   E-mail: research@angelbroking.com                    Website: www.angelbroking.com

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  Disclosure of Interest Statement                                         Indian Overseas 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
  4. Broking relationship with company covered                                        No

  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%)


May 9, 2012                                                                                                                                10

								
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