Arihant Capital recommended hold rating on City Union Bank with a target price of Rs 205 in its research report dated January 29, 2019.
Arihant Capital's research report on City Union Bank
City Union Bank reported mixed set of numbers in Q3FY19 supported by NII growth. Profit for the quarter grew by 15% at Rs. 178 cr vs Rs. 155 cr in corresponding quarter of previous fiscal year. Loan growth of the bank remained steady at 17% leading to 15% jump in NII at Rs. 418 cr resulting to stable margins offset by decline in cost of deposits despite a decline in yield on advances. Operating profit for the quarter grew by 3.5% YoY at Rs. 307 cr. Other income for the quarter de-grew by 1.5% at Rs. 120 cr due to decline in bank’s treasury book. Asset quality of the bank deteriorated marginally with a 6 bps rise in its GNPAs at 2.91% vs 2.85% on sequential basis. Management has given steady outlook going forward and retained credit growth guidance of 18-20% which we have factored in our estimates.
Outlook
We remain positive on CUB’s growthand believe it will sustain their performance. Maintain HOLD rating with TP of Rs. 205.
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