City Union Bank Q3 Results Review - Balance Sheet Growth Slows To A Crawl: Yes Securities

Yes Securities Report

The growth performance of City Union Bank is particularly disappointing since it has persisted and is despite a small base:

The bread-and-butter micro, small, and medium enterprises advances have de-grown -2.0% QoQ and -4.3% YoY. However, management has stated that the MSME segment is improving now, and the bank is getting proposals for capacity expansion. Agri loans have de-grown -5.8% QoQ and -17.1% YoY.

However, the unwinding of the Agri kisan credit card loan book is almost done now. The bank would try and achieve close to double digit growth for FY24.

The sequential margin contraction was driven by interest reversal on funded interest term loan accounts:

During this quarter, there was a ‘one-off’ interest reversal of Rs 250 million pertaining to non performing FITL accounts.

Excluding this one-off impact, the net interest margin would have been 3.67% in Q3 FY24 and 3.69% for 9M FY24. NIM would be around current levels (‘current level’ likely to be excluding FITL impact) plus or minus 10 basis points.

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