Dear All,
Forwarding you the Result Flash on Dena Bank for 4QFY2011.
Dena Bank - 4QFY2011 Results Flash
Dena Bank announced its 4QFY2011 results today, registering moderate net profit growth of 14.5% yoy and marginal 1.2% qoq to Rs157cr, inline with our estimates of Rs156cr. However other income growth was stronger than estimated which was offset by higher provisioning costs.
Key highlights:
· Business growth momentum was strong with advances and deposits growth of 8.2% qoq and 6.2% qoq, respectively. On a yoy basis, advances and deposits grew by 26.4% and 25.1%, respectively.
· NII grew by a healthy 44.5% yoy to Rs471cr. However on a sequential basis, NII growth was muted at 1% due sequential decline in calculated NIMs of ~20bp. Non-interest income growth was strong sequentially, registering a growth of 42.3% qoq.
· Operating expenses increased by 39.8% yoy driven by a 55.9% yoy jump in employee expenses. During FY2011, the bank made provision for enhancement in gratuity limits of Rs16cr (1/5th of total liability of Rs80cr). It also took a hit of Rs71cr towards additional liability for serving employees under the second pension option and Rs118cr towards liability for retired employees. Balance liability carried forward for gratuity stands at Rs64cr and for Pension at Rs283cr. As a result of faster growth in operating expenses compared to operating income the cost-to-income ratio of the bank increased to 47.4% from 44.1% in 4QFY2010.
· The asset quality of the bank deteriorated a bit during 4QFY2011 with the absolute Gross NPAs increasing by 4.8% qoq and Net NPAs rising by 5.7% qoq. Gross and Net NPA ratios remained sequentially stable at 1.9% and 1.2%, respectively. The provision coverage ratio stood at 74.6% (76.1% in 3QFY2011) including technical write-offs. Provisioning expenses were substantially higher, rising by 44.5% qoq and 50.2% yoy to Rs124cr (at ~0.7% of average assets vs ~0.4% of average assets during 9MFY2011)
· The bank’s CAR improved to 13.4% on the back of capital infusion by the government.
At the CMP, the stock is trading at 0.8x FY2013E ABV. We maintain our Accumulate recommendation on the stock with a Target Price of Rs120. We may revise our estimates post interaction with the management.
| Exhibit 1: 4QFY2011 Actual vs. Estimates | |||
| (Rs cr) | Actual | Estimates | Var (%) |
| Net interest income | 471 | 472 | (0.2) |
| Non-interest income | 181 | 147 | 23.1 |
| Operating income | 652 | 619 | 5.3 |
| Operating expenses | 309 | 291 | 6.1 |
| Pre-prov. profit | 343 | 328 | 4.6 |
| Provisions & contingencies | 124 | 93 | 33.8 |
| PBT | 219 | 235 | (6.8) |
| Prov. for taxes | 62 | 79 | (21.3) |
| PAT | 157 | 156 | 0.5 |
Source: Company, Angel Research
Exhibit 2: 4QFY2011 Performance summary
| (Rs cr) | 4QFY2011 | 3QFY2011 | % chg (qoq) | 4QFY2010 | % chg (yoy) |
| Interest earned | 1,407 | 1,290 | 9.1 | 1,063 | 32.4 |
| Interest expenses | 936 | 823 | 13.7 | 737 | 27.0 |
| Net interest income | 471 | 466 | 1.0 | 326 | 44.5 |
| Non-interest income | 181 | 127 | 42.3 | 175 | 3.4 |
| Operating income | 652 | 593 | 9.9 | 501 | 30.1 |
| Operating expenses | 309 | 277 | 11.5 | 221 | 39.8 |
| Pre-prov. profit | 343 | 316 | 8.4 | 280 | 22.5 |
| Provisions & contingencies | 124 | 86 | 44.5 | 82 | 50.2 |
| PBT | 219 | 231 | (5.0) | 198 | 10.9 |
| Prov. for taxes | 62 | 76 | (17.5) | 61 | 2.8 |
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