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Dolat Capital Report
City Union Bank Ltd. posted steady quarter with-
in-line net interest margin at 3.66% (+16 bps QoQ),
come-back in growth +5.5% QoQ,
contained slippages at 1.9%, and
low credit costs 30 bps, aiding return on asset of 1.5%.
Loan growth was driven by agri +20% QoQ.
Management continues to guide for negative net slippages in FY25E and intends to launch secured retail products (home loan, loan against property, affordable housing, micro-LAP) by end of H1 FY25. Opex should remain elevated (CI at 47-51%) in the medium term owing to investment in products and processes.
We tweak estimates, factoring in lower NIM and higher opex assumptions offset by lower credit costs. Improving growth trends is a positive.
Maintain ‘Accumulate’ rating with target price of Rs 170 (1.3 times FY26E price/adjusted book ) against return on asset/return on equity of 1.5%/13%.
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Also Read: Bandhan Bank Q4 Results Review - PPoP Inline; Higher Write-Off Drags Down Earnings: Motilal Oswal
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