Indian Overseas Bank-RU3QFY2011-310111

Document Sample
Indian Overseas Bank-RU3QFY2011-310111 Powered By Docstoc
					                                                                                               3QFY2011 Result Update | Banking
                                                                                                                         January 31, 2010



 Indian Overseas Bank                                                                        BUY
                                                                                             CMP                                    `130
 Performance Highlights                                                                      Target Price                           `166
  
                                                                                             Investment Period               12 Months
 Particulars (` cr)     3QFY11      2QFY11           % chg (qoq)   3QFY10     % chg (yoy)
 NII                      1,130        956                  18.2      794           42.3
                                                                                            Stock Info
 Pre-prov. profit            804        616                30.6       406           98.0
                                                                                            Sector                                 Banking
 PAT                         232        206                12.4       102          127.7
                                                                                            Market Cap (` cr)                        7,107
 Source: Company, Angel Research
                                                                                            Beta                                       1.1
 For 3QFY2011, IOB reported a strong set of numbers, registering robust growth
                                                                                            52 Week High / Low                      176/85
 of 127.7% yoy and 12.4% qoq in net profit to `232cr, above our estimates of
 `183cr on account of strong performance on the operating income front and                  Avg. Daily Volume                      192,808

 further improvement in asset quality. We maintain Buy on the stock.                        Face Value (`)                              10
                                                                                            BSE Sensex                              18,328
 Strong operating performance; better asset quality: Advances grew by 15.9%
                                                                                            Nifty                                    5,506
 qoq and 26.1% yoy to `100,129cr during the quarter. Deposits increased by
                                                                                            Reuters Code                           IOBK.BO
 5.9% qoq and 17.7% yoy to `125,062cr. CASA deposits grew by 21.7% yoy but
                                                                                            Bloomberg Code                         IOB@IN
 declined by 0.9% qoq to `38,731cr. Consequently, CASA ratio fell to 31.0%
 from 33.1% in 2QFY2011. Reported NIM increased by 25bp qoq to 3.27%
 (3.02% in 2QFY2011 and 2.69% in 3QFY2010). Staff expenses increased by                     Shareholding Pattern (%)
 15.1% sequentially to `484cr on account of DA hikes given to employees during              Promoters                                 61.2
 the quarter. The cost-to-income ratio improved to 45.7% v/s 50.0% in                       MF / Banks / Indian Fls                   14.5
 2QFY2011 and 61.4% in 3QFY2010. Slippages for the quarter stood at                         FII / NRIs / OCBs                          8.6
 `183cr, implying an annualised slippage ratio of 0.9% v/s 3.7% in 2QFY2011.
                                                                                            Indian Public / Others                    15.7
 Gross NPAs declined by 1.9% qoq to `3,265cr due to high deductions of `245cr
 seen during 3QFY2011. The provision coverage ratio stood at 65.4% including
 technical write-offs, and the bank will have to make additional provisions of              Abs. (%)                   3m    1yr       3yr
 ~`225cr in 4QFY2011 to meet the mandated 70% provision coverage ratio.                     Sensex                   (10.0) 12.1       3.8
 Outlook and valuation: We maintain our positive view on the stock, considering             IOB                      (19.8) 41.3     (19.6)
 the potential improvement in asset quality, earnings and RoE going forward,
 along with IOB’s structurally reasonably healthy deposit franchise. Accordingly,
 we have increased our earnings estimates for FY2011 and FY2012 by 15.6%
 and 21.9%, respectively, and expect the bank to improve its RoE back again
 from 11.5% in FY2010 to 17.0% in FY2012E. At the CMP, the stock is trading at
 0.9x FY2012E P/ABV, which is below our target multiple of 1.15x for the stock.
 We maintain our Buy rating on the stock with a Target Price of `166.
 Key financials
 Y/E March (` cr)                         FY2009        FY2010     FY2011E     FY2012E
 NII                                        2,870         3,114      4,108       4,361      Vaibhav Agrawal
 % chg                                         7.1          8.5        31.9         6.2     022 – 3935 7800 Ext: 6808
 Net profit                                 1,326           707        949       1,287      vaibhav.agrawal@angelbroking.com
 % chg                                        10.3        (46.7)       34.2        35.6
 NIM (%)                                       2.7          2.6         3.0         2.7     Shrinivas Bhutda
                                                                                            022 – 3935 7800 Ext: 6845
 EPS (`)                                      24.3         13.0       17.4         23.6
                                                                                            shrinivas.bhutda@angelbroking.com
 P/E (x)                                       5.4         10.1         7.5         5.5
 P/ABV (x)                                     1.3          1.4         1.0         0.9
                                                                                            Varun Varma
 RoA (%)                                       1.2          0.6         0.7         0.8
                                                                                            022 – 3935 7800 Ext: 6847
 RoE (%)                                      24.8         11.5       14.1         17.0     varun.varma@angelbroking.com
 Source: Company, Angel Research


Please refer to important disclosures at the end of this report                                                                          1
                                             Indian Overseas Bank | 3QFY2011 Result Update



                   Exhibit 1: 3QFY2011 performance
                   Particulars (` cr)           2QFY11 1QFY11 % chg (qoq) 2QFY10 % chg (yoy)
                   Interest Earned                   3,102   2,800        10.8         2,570          20.7
                   Interest Expenses                 1,971   1,844            6.9      1,776          11.0
                   NII                               1,130    956         18.2           794          42.3
                   Non-Interest Income                351     275         27.9           259          35.9
                   Operating Income                  1,481   1,231        20.4         1,053          40.7
                   Operating Expenses                 677     615         10.1           647            4.7
                   Pre-Prov. Profit                   804     616         30.6           406          98.0
                   Provisions & Cont.                 358     305         17.4           219          63.8
                   PBT                                446     311         43.6           187         137.8
                   Exceptional Expenses                  -      0               -           -             -
                   Prov. for Taxes                    214     104       105.2             86         149.8
                   PAT                                232     206         12.4           102         127.7
                   EPS (`)                             4.3     3.8        12.4            1.9        127.7
                   Cost to Income (%)                 45.7    50.0                      61.4
                   Effective Tax Rate (%)             48.0    33.6                      45.7
                   Net NPA (%)                         1.5     2.0                        2.2
                   Source: Company, Angel Research


                   Exhibit 2: Actual v/s Angel estimates
                    Particulars (` cr)                               Actual         Estimates Variation (%)
                   NII                                               1,130               963          17.3
                   Non-Interest Income                                 351               274          28.2
                   Operating Income                                  1,481             1,237          19.7
                   Operating Expenses                                  677               633           7.1
                   Pre-Prov. Profit                                    804               605          33.0
                   Provisions & Cont.                                  358               329           8.8
                   PBT                                                 446               276          61.8
                   Prov. for Taxes                                     214                93         130.7
                   PAT                                                 232               183          26.8
                   Source: Company, Angel Research




January 31, 2011                                                                                          2
                                                                 Indian Overseas Bank | 3QFY2011 Result Update



                   Strong growth in advances and deposits

                   Advances grew by 15.9% qoq and by 26.1% yoy to `100,129cr. Deposits
                   increased by 5.9% qoq and 17.7% yoy to `125,062cr. The credit-deposit ratio
                   stood at 80.1% compared to 73.1% in 2QFY2011. The incremental CD ratio stood
                   at 198.6% on account of higher-than-industry qoq growth in advances.

                   CASA deposits increased by 21.7% yoy but declined by 0.9% qoq to `38,731cr.
                   Consequently, CASA ratio declined to 31.0% from 33.1% in 2QFY2011. Saving
                   account deposits increased by 22.6% yoy to `30,346cr. Demand deposits
                   increased by 18.8% yoy to `8,835cr. During the quarter, the bank’s NII grew
                   strongly by 42.3% yoy and 18.2% qoq to `1,130cr on account of a substantial
                   25bp qoq increase in reported NIMs to 3.27% (3.02% in 2QFY2011 and 2.69% in
                   3QFY2010). For FY2012E, we estimate advances and deposits to grow by 18.0%
                   and 20%, respectively.

                   Exhibit 3: Trend in advances and deposits
                                Advances (` cr)                                                         Deposits (` cr)
                                Advances qoq growth (%, RHS)                                            Deposits qoq growth (%, RHS)

                     140,000                                                                                                                        15.9        20.0
                                                                                                                                                                16.0
                     105,000
                                                                               8.6                                                    7.9                       12.0
                      70,000                           5.7                                                                                           5.9        8.0
                                                      10.2                                            4.3
                                           2.8
                                                                   0.7                                                                                          4.0
                      35,000                                                                                            (1.2)
                                                                                         (2.9)
                                                                                          3.2                                         4.1                       -
                                                                                                      1.7                2.7
                                                                   1.4
                            -              0.1                                 0.1                                                                              (4.0)
                                           3QFY09


                                                        4QFY09


                                                                    1QFY10


                                                                               2QFY10


                                                                                         3QFY10


                                                                                                      4QFY10


                                                                                                                        1QFY11


                                                                                                                                          2QFY11


                                                                                                                                                      3QFY11
                   Source: Company, Angel Research



                   Exhibit 4: Trend in deposit mix
                                                                             CASA           Term Deposits
                    100%

                     80%

                                 70.8               69.7          70.8         72.0        70.1            67.5                  66.9              66.9        69.0
                     60%

                     40%

                     20%                                                                                                         33.1              33.1
                                 29.2               30.3          29.2         28.0        29.9            32.5                                                31.0
                       0%
                                  3QFY09



                                                    4QFY09



                                                                   1QFY10



                                                                                2QFY10



                                                                                             3QFY10



                                                                                                               4QFY10



                                                                                                                                 1QFY11



                                                                                                                                                   2QFY11



                                                                                                                                                               3QFY11




                   Source: Company, Angel Research




January 31, 2011                                                                                                                                                        3
                                                      Indian Overseas Bank | 3QFY2011 Result Update



                   Non-interest income above expectations

                   Non-interest income increased by healthy 35.9% yoy and by 27.9% qoq to `351cr
                   on account of recoveries amounting to `77cr during the quarter. The treasury
                   income grew by 34.1% yoy and 54.7% qoq to `23cr. Fee income grew by 18.5%
                   yoy but declined sequentially by 0.9% to `161cr during the quarter.

                   Exhibit 5: Break-up of non-interest income
                   Particulars (` cr)            3QFY11        2QFY11                  % chg (qoq)                 3QFY10            % chg (yoy)
                   CEB                               161                163                        (0.9)               136                  18.5
                   Treasury                            23                 15                       54.7                       17            34.1
                   Others                            167                  97                       72.1                106                  57.7
                   Total                             351                275                        27.9                259                  35.9
                   Source: Company, Angel Research


                   Improved asset quality

                   Slippages for the quarter stood at `183cr, implying an annualised slippage ratio of
                   0.9% compared to 3.7% in 2QFY2011. Gross NPAs declined by 1.9% qoq to
                   `3,265cr on account of high deductions of `244cr seen during 3QFY2011. Net
                   NPAs also declined by 15.7% qoq to `1,487cr. Consequently, gross NPA ratio
                   improved to 3.3% from 3.8% in 2QFY2011 and net NPA ratio improved to 1.5%
                   from 2.0% in 2QFY2011. The bank made provisions for NPA amounting to `302cr
                   during the quarter (`274cr in 2QFY2011). The restructured book as of 3QFY2011
                   stood at `7,600cr (7.6% of loan book) as compared to `7,155cr (8.3% of loan
                   book) in 2QFY2011.

                   During the quarter, the provision coverage ratio stood at 65.4% including technical
                   write-offs, compared to 60.0% as of 2QFY2011. The bank will have to make
                   additional provisions of ~`225cr in 4QFY2011 to meet the mandated 70%
                   provision coverage ratio.

                   Exhibit 6: Trend in asset quality
                                       Gross NPAs (%)                   Net NPAs (%)                       NPA coverage (%, RHS)
                     5.0                                                                                                                    80.0
                                                                                                                                   65.4
                     4.0                                                                                            60.0
                                                                                                      57.9
                                                               54.4                      54.0                                               60.0
                     3.0                   48.1      48.6                   47.5
                              46.4
                     2.0
                                                                                                                                            40.0
                     1.0
                              2.4
                              1.3

                                           2.5
                                           1.3

                                                     3.0
                                                     1.6

                                                               3.4
                                                               1.6

                                                                            4.1
                                                                            2.2

                                                                                         4.5
                                                                                         2.5

                                                                                                      4.3
                                                                                                      2.2

                                                                                                                    3.8
                                                                                                                    2.0

                                                                                                                                   3.3
                                                                                                                                   1.5




                     0.0                                                                                                                    20.0
                              3QFY09


                                            4QFY09


                                                      1QFY10


                                                               2QFY10


                                                                              3QFY10


                                                                                          4QFY10


                                                                                                          1QFY11


                                                                                                                     2QFY11


                                                                                                                                   3QFY11




                   Source: Company, Angel Research; Note: NPA coverage % excluding write-offs till 3QFY2010




January 31, 2011                                                                                                                               4
                                                            Indian Overseas Bank | 3QFY2011 Result Update



                   Operating expenses rise

                   Staff expenses increased by 15.1% qoq to `484cr on account of DA hikes given to
                   employees during the quarter. The bank’s gross liability arising out of second
                   pension option is `1,200cr–`1,300cr, which it is amortising over three years (as
                   against five years for most other banks). The bank provided `36cr as gratuity and
                   `108cr for pension liabilities in 3QFY2011 (`324cr for the first nine months) and
                   plans to maintain the same run-rate going forward. The cost-to-income ratio
                   improved to 45.7% compared to 50.0% in 2QFY2011 and 61.4% in 3QFY2010.

                   Exhibit 7: Trend in productivity
                            Staff exps (` cr)                        Other opex (` cr)                          Cost-to-income ratio (%, RHS)
                     800                                                               61.4                                                                      65.0
                                                                                                    58.7         58.6
                     700                                    57.1                                                                                                 60.0
                                                                         52.1




                                                                                                                                                     194
                                                                                                                 183
                                                                                         179
                     600                                                                                                                                         55.0




                                                                                                     214
                                                                              176




                                                                                                                                   195
                                                            163
                     500                  174
                                                                                                                                            45.7                 50.0
                              192




                     400                                                                                                     50.0
                                                                                                                                                                 45.0
                     300                  38.8
                             36.8                                                                                                                                40.0
                     200
                              313


                                          340


                                                            408


                                                                              426


                                                                                         468


                                                                                                     433


                                                                                                                 474


                                                                                                                                   420


                                                                                                                                                     484
                     100                                                                                                                                         35.0
                       -                                                                                                                                         30.0
                              3QFY09


                                          4QFY09


                                                            1QFY10


                                                                              2QFY10


                                                                                         3QFY10


                                                                                                     4QFY10


                                                                                                                 1QFY11


                                                                                                                                   2QFY11


                                                                                                                                                     3QFY11
                   Source: Company, Angel Research


                   Comfortable capital adequacy

                   During the quarter, IOB’s CAR stood at 13.5%, with tier-I capital of 7.3% and tier-II
                   capital of 6.2%.

                   Exhibit 8: Comfortable capital adequacy

                      (%)                                               Tier-I CAR                Tier-II CAR
                     16.0


                     12.0                                            6.1               6.1            6.1             5.9
                                 5.1               5.4                                                                                      5.5               6.2
                      8.0


                      4.0        7.6               7.9               8.5               8.6            8.7             8.3                   7.7               7.3

                       -
                                 4QFY09



                                                   1QFY10



                                                                     2QFY10



                                                                                       3QFY10



                                                                                                       4QFY10



                                                                                                                          1QFY11



                                                                                                                                            2QFY11



                                                                                                                                                              3QFY11




                   Source: Company, Angel Research




January 31, 2011                                                                                                                                                        5
                                            Indian Overseas Bank | 3QFY2011 Result Update



                   Investment arguments

                   Asset quality improving

                   Slippages for the quarter stood at `183cr, implying an annualised slippage ratio of
                   0.9% compared to 3.7% in 2QFY2011. Gross NPAs declined by 1.9% qoq to
                   `3,265cr on account of high deductions of `245cr seen during 3QFY2011. Net
                   NPAs also declined by 15.7% qoq to `1,487cr. Consequently, gross NPA ratio
                   improved to 3.3% from 3.8% in 2QFY2011 and net NPA ratio improved to 1.5%
                   from 2.0% in 2QFY2011. Recoveries and upgrades for the first three quarters
                   stand at `991cr and management expects this figure to touch ~`1,200cr by the
                   end of 4QFY2011. Management also targets to bring down gross NPA below
                   3.0% by FY2011E (gross NPA below `3,000cr).

                   We have factored in slippages at `1,774cr in FY2011E, implying a slippage rate of
                   2.2%, which is lower than `3,127cr of slippages (at a 4.2% slippage rate) that the
                   bank experienced in FY2010. NPA provisions/average assets are expected to
                   decline sharply to 0.2% in FY2012E as against 0.7% in FY2010. Consequently, the
                   bank’s RoE is expected to improve to 17.0% in FY2012E as against 11.5% in
                   FY2010.

                   Reasonable valuations

                   We maintain our positive view on the stock, considering the potential improvement
                   in asset quality, earnings and RoE going forward, along with IOB’s structurally
                   reasonably healthy deposit franchise. Accordingly, we have increased our earnings
                   estimates for FY2011 and FY2012 by 15.6% and 21.9%, respectively, and expect
                   the bank to improve its RoE back again from 11.5% in FY2010 to 17.0% in
                   FY2012E.

                   At the CMP, the stock is trading at 0.9x FY2012E P/ABV, which is below our target
                   multiple of 1.15x for the stock. We maintain our Buy rating on the stock with a
                   Target Price of `166.




January 31, 2011                                                                                    6
                                                                  Indian Overseas Bank | 3QFY2011 Result Update



                   Exhibit 9: Key assumptions
                                                                                                 Earlier estimates                             Revised estimates
                   Particulars (%)
                                                                                               FY2011E                FY2012E                  FY2011E             FY2012E
                   Credit growth                                                                        17.0                20.0                     26.0                    18.0
                   Deposit growth                                                                       15.0                19.0                     16.0                    20.0
                   CASA ratio                                                                           32.5                31.0                     32.2                    30.5
                   NIM                                                                                   2.8                    2.4                      3.0                  2.7
                   Other income growth                                                              (10.2)                  14.4                     (4.6)                   10.5
                   Growth in staff expenses                                                              1.0                14.0                         8.0                 15.0
                   Growth in other expenses                                                             10.0                14.0                         8.0                 15.0
                   Slippages                                                                             2.7                    2.5                      2.2                  2.0
                   Coverage ratio                                                                       70.0                70.0                     70.0                    71.0
                   Treasury gain/(loss) (% of investments)                                              0.2                    0.1                       0.2                 0.1
                   Source: Company, Angel Research


                   Exhibit 10: Change in estimates
                                                                                    FY2011E                                                    FY2012E
                   Particulars
                   (` cr)                                        Earlier               Revised                         Earlier                     Revised
                                                                                                              % chg                                                         % chg
                                                              estimates              estimates                      estimates                    estimates
                   NII                                            3,782                  4,108                  8.6     3,874                        4,361                  12.6
                   Non-interest income                            1,075                    1,141                   6.2           1,229                   1,261                2.6
                   Operating income                               4,857                    5,249                   8.1           5,103                   5,623               10.2
                   Operating expenses                             2,557                    2,664                   4.2           2,915                   3,063                5.1
                   Pre-Prov. profit                               2,300                    2,586                  12.4           2,188                   2,559               16.9
                   Provisions & cont.                             1,062                    1,126                   6.1               596                   618                3.7
                   PBT                                            1,238                    1,459                  17.9           1,592                   1,941              21.9
                   Prov. for taxes                                     417                     511                22.4               537                   654              21.9
                   PAT                                                 821                     949                15.6           1,056                   1,287              21.9
                   Source: Company, Angel Research




                   Exhibit 11: P/ABV band
                                          Price (`)                    0.4x                    0.8x                    1.2x                    1.6x                  2.0x
                    300


                    250


                    200


                    150


                    100


                         50


                         0
                                       Oct-02




                                                                                      Oct-05




                                                                                                                            Feb-08

                                                                                                                                      Sep-08




                                                                                                                                                          Nov-09
                                                May-03




                                                                                               May-06
                                                         Dec-03




                                                                                                         Dec-06




                                                                                                                                                                   Jun-10

                                                                                                                                                                              Jan-11
                                                                  Jul-04




                                                                                                                   Jul-07




                                                                                                                                                Apr-09
                              Mar-02




                                                                           Mar-05




                   Source: Company




January 31, 2011                                                                                                                                                                   7
                                                                                   Indian Overseas Bank | 3QFY2011 Result Update



Exhibit 12: Recommendation summary
                                  CMP     Tgt. price    Upside     FY2012E FY2012E Tgt.          FY2012E     FY10-12E EPS   FY2012E    FY2012E
 Company        Reco.
                                   (`)            (`)      (%)     P/ABV (x)  P/ABV (x)            P/E (x)      CAGR (%)     RoA (%)    RoE (%)
 AxisBk         Buy              1,247        1,688        35.4          2.4              3.2         12.3           27.6        1.6       20.8
 FedBk          Buy                365          438        20.1          1.1              1.3          8.0           29.1        1.4       14.2
 HDFCBk         Buy              2,043        2,499        22.3          3.3              4.0         17.7           33.8        1.7       19.9
 ICICIBk*       Buy              1,020        1,312        28.7          2.0              2.6         16.8           29.7        1.5       15.8
 SIB            Accumulate          20            22         8.5         1.2              1.3          7.1           16.9        1.0       17.4
 YesBk          Buy                263          313        18.9          2.0              2.4         12.2           23.8        1.3       17.9
 BOI            Accumulate         439          500        13.8          1.3              1.5          7.1           36.4        0.9       19.9
 CorpBk         Accumulate         574          654        13.8          1.1              1.2          5.8           10.4        1.0       19.3
 DenaBk         Buy                105          127        20.8          0.9              1.1          4.8            8.6        0.9       21.0
 IndBk          Buy                210          274        30.4          1.0              1.3          5.0            9.6        1.4       21.2
 IOB            Buy                130          166        27.0          0.9              1.2          5.5           34.9        0.8       17.0
 J&KBk          Buy                738          987        33.8          0.9              1.2          5.1           14.4        1.3       18.0
 OBC            Buy                331          393        18.6          0.8              1.0          5.0           20.7        1.0       18.0
 PNB            Accumulate       1,102        1,259        14.2          1.5              1.7          7.4            9.8        1.2       21.9
 SBI*           Buy              2,641        3,490        32.1          2.0              2.6         11.0           29.2        1.1       20.4
 UcoBk          Neutral            108              -          -         1.1                 -         5.0            8.7        0.8       28.8
 UnionBk        Buy                331          389        17.7          1.4              1.6          7.1            6.3        1.0       20.8

 Source: Company, Angel Research; Note: *Target multiples=SOTP target price/ABV (including subsidiaries)




January 31, 2011                                                                                                                           8
                                               Indian Overseas Bank | 3QFY2011 Result Update



                   Income statement
                   Y/E March (` cr)            FY06      FY07      FY08        FY09     FY10     FY11E     FY12E
                   Net Interest Income        2,067     2,561      2,679      2,870    3,114     4,108     4,361
                   - YoY Growth (%)            11.4       23.9       4.6        7.1      8.5      31.9       6.2
                   Other Income                 728       863      1,075      1,713    1,197     1,141     1,261
                   - YoY Growth (%)            (8.9)      18.5      24.7       59.3    (30.2)     (4.6)     10.5
                   Operating Income           2,795     3,424      3,755      4,583    4,311     5,249     5,623
                   - YoY Growth (%)             5.3       22.5       9.7       22.0     (5.9)     21.8       7.1
                   Operating Expenses         1,262     1,388      1,485      1,942    2,466     2,664     3,063
                   - YoY Growth (%)             8.9       10.0       7.0       30.7     27.0       8.0      15.0
                   Pre - Provision Profit     1,534     2,036      2,270      2,641    1,845     2,586     2,559
                   - YoY Growth (%)             2.5       32.7      11.5       16.4    (30.2)     40.2      (1.0)
                   Prov. & Cont.                548       662       615        687       866     1,126       618
                   - YoY Growth (%)             4.5       20.8      (7.2)      11.7     26.1      30.1     (45.1)
                   Profit Before Tax            986     1,373      1,655      1,954      979     1,459     1,941
                   - YoY Growth (%)             1.4       39.3      20.5       18.1    (49.9)     49.1      33.0
                   Prov. for Taxation           202       365       452        629       272       511       654
                   - as a % of PBT             20.5       26.6      27.3       32.2     27.8      35.0      33.7
                   PAT                          783     1,008      1,202      1,326      707       949     1,287
                   - YoY Growth (%)            20.3       28.7      19.2       10.3    (46.7)     34.2      35.6



                   Balance sheet
                   Y/E March (` cr)          FY06       FY07      FY08        FY09      FY10     FY11E    FY12E
                   Share Capital              545        545       545         545       545       545      545
                   Reserves & Surplus        2,633      3,446     4,312       6,606     6,980     7,706    8,707
                   Deposits                 50,529     68,740    84,326     100,116   110,795   128,522 154,226
                   - Growth (%)               14.2       36.0      22.7        18.7      10.7      16.0     20.0
                   Borrowings                 737       2,896     6,354       6,548     4,111     4,769    5,723
                   Tier 2 Capital            1,883      2,688     2,837       2,837     4,871     6,138    7,243
                   Other Liab. & Prov.       3,032      3,942     3,487       4,422     3,795     4,393    6,043
                   Total Liabilities        59,358     82,257 101,860       121,073   131,097   152,072 182,487
                   Cash Balances             3,078      4,686     9,124       5,940     7,666     8,997   11,567
                   Bank Balances              629       4,293     1,217       4,981     2,158     2,504    3,004
                   Investments              18,952     23,974    28,475      31,215    37,651    35,730   44,164
                   Advances                 34,756     47,060    60,424      74,885    79,004    99,545 117,463
                   - Growth (%)               37.9       35.4      28.4        23.9       5.5      26.0     18.0
                   Fixed Assets               458        511       559        1,710     1,700     1,912    2,226
                   Other Assets              1,484      1,732     2,061       2,341     2,918     3,385    4,062
                   Total Assets             59,358     82,257 101,860       121,073   131,097   152,072 182,487
                   - Growth (%)               16.8       38.6      23.8        18.9       8.3      16.0     20.0




January 31, 2011                                                                                             9
                                                 Indian Overseas Bank | 3QFY2011 Result Update



                   Ratio analysis
                   Y/E March                             FY06   FY07   FY08   FY09   FY10   FY11E   FY12E
                   Profitability ratios (%)
                   NIMs                                   3.9    3.7    3.0    2.7    2.6     3.0     2.7
                   Cost to Income Ratio                  45.1   40.5   39.6   42.4   57.2    50.7    54.5
                   RoA                                    1.4    1.4    1.3    1.2    0.6     0.7     0.8
                   RoE                                   28.5   29.1   27.9   24.8   11.5    14.1    17.0
                   B/S ratios (%)
                   CASA Ratio                            39.9   34.9   33.5   30.3   32.5    32.2    30.5
                   Credit/Deposit Ratio                  68.8   68.5   71.7   74.8   71.3    77.5    76.2
                   CAR                                   13.0   13.3   12.0   11.8   13.6    13.8    13.3
                   - Tier I                               8.5    8.2    7.9    7.0    8.0     7.6     7.2
                   Asset Quality (%)
                   Gross NPAs                             3.4    2.3    1.6    2.5    4.5     4.0     3.9
                   Net NPAs                               0.6    0.5    0.6    1.3    2.5     1.5     1.4
                   Slippages                              1.8    2.0    1.4    3.7    4.1     2.2     2.0
                   Loan Loss Prov./Avg. Assets            0.3    0.2    0.1    0.3    0.7     0.7     0.2
                   Provision Coverage                    81.7   77.0   63.6   48.0   54.0    70.0    71.0
                   Per Share Data (`)
                   EPS                                   14.4   18.5   22.1   24.3   13.0    17.4    23.6
                   ABVPS                                 56.1   71.1   85.0   99.5   96.5   125.2   144.1
                   DPS                                    2.6    3.0    3.2    4.5    3.5     3.5     4.5
                   Valuation Ratios
                   PER (x)                               11.7    9.1    7.6    6.9   12.9     7.5     5.5
                   P/ABVPS (x)                            3.0    2.4    2.0    1.7    1.7     1.0     0.9
                   Dividend Yield                         1.5    1.8    1.9    2.7    2.1     2.7     3.4
                   DuPont Analysis (%)
                   NII                                    3.8    3.6    2.9    2.6    2.5     2.9     2.6
                   (-) Prov. Exp.                         1.0    0.9    0.7    0.6    0.7     0.8     0.4
                   Adj. NII                               2.8    2.7    2.2    2.0    1.8     2.1     2.2
                   Treasury                               0.4    0.3    0.2    0.6    0.2     0.1     0.0
                   Int. Sens. Inc.                        3.2    3.0    2.5    2.5    2.0     2.2     2.3
                   Other Inc.                             0.9    0.9    0.9    1.0    0.7     0.8     0.7
                   Op. Inc.                               4.1    3.9    3.4    3.5    2.7     2.9     3.0
                   Opex                                   2.3    2.0    1.6    1.7    2.0     1.9     1.8
                   PBT                                    1.8    1.9    1.8    1.8    0.8     1.0     1.2
                   Taxes                                  0.4    0.5    0.5    0.6    0.2     0.4     0.4
                   RoA                                    1.4    1.4    1.3    1.2    0.6     0.7     0.8
                   Leverage (x)                          20.1   20.4   21.4   20.9   20.5    21.1    22.1
                   RoE                                   28.5   29.1   27.9   24.8   11.5    14.1    17.0




January 31, 2011                                                                                     10
                                                                              Indian Overseas Bank | 3QFY2011 Result Update




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

  DISCLAIMER
  This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
  decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
  such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
  referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
  risks of such an investment.

  Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
  investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
  document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

  Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
  trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
  fundamentals.

  The information in this document has been printed on the basis of publicly available information, internal data and other reliable
  sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
  document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
  responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
  Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
  nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
  Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
  compliance, or other reasons that prevent us from doing so.
  This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
  redistributed or passed on, directly or indirectly.

  Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
  other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
  the past.

  Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
  connection with the use of this information.

  Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
  latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have
  investment positions in the stocks recommended in this report.




  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%)




January 31, 2011                                                                                                                           11

				
DOCUMENT INFO
Categories:
Tags:
Stats:
views:180
posted:2/1/2011
language:English
pages:11