CITY UNION BANK 2023-24 Annual Report Analysis

Thu, 1 Aug

CITY UNION BANK has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the bank during the year 2023-24.

CITY UNION BANK Income Statement Analysis

• Interest income during the year rose 11.8% on a year-on-year (YoY) basis.
• Interest expenses were up by 23.3% YoY during the same period.
• Operating expenses increased by 16.7% YoY during the year.
• The bank's net interest income (NII) decreased by 1.8% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 3.5% in FY24 as against 3.8% in FY23.
• Other income declined by 8.5% YoY during the year.
• Net profit for the year increased by 8.3% YoY.
• Net profit margins during the year declined to 19.3% in FY24 from 19.9% in FY23.

CITY UNION BANK Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	47,143	52,706	11.8%
Other Income	Rs m	8,104	7,417	-8.5%
Interest Expense	Rs m	25,515	31,471	23.3%
Net Interest Income	Rs m	21,628	21,235	-1.8%
Operating Expense	Rs m	11,552	13,484	16.7%
Pre-provision Operating Profit	Rs m	18,180	15,167	-16.6%
Provisions & Contingencies	Rs m	8,805	5,010	-43.1%
Profit before tax	Rs m	11,775	12,307	4.5%
Tax	Rs m	2,400	2,150	-10.4%
Profit after tax	Rs m	9,375	10,157	8.3%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	3.8	3.5
Net profit margin	%	19.9	19.3

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CITY UNION BANK Balance Sheet Analysis

• The bank's deposits during FY24 stood at Rs 556.6 bn as compared to Rs 524.0 bn in FY23, thereby witnessing an increase of 6.2%.
• Advances for the year stood at Rs 455.3 bn as compared to Rs 430.5 bn during FY23, a rise of 5.7%.
• Cost of deposits for CITY UNION BANK rose 19.7% and stood at 5.2%, while yield on advances rose to 9.1%.
• The lender's investments rose to Rs 156.6 bn during the year from Rs 143.3 bn in FY23.
• Borrowing stood at Rs 47.2 bn, a growth of 0.8% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 708.3 bn as against Rs 665.9 bn during FY23, thereby witnessing a rise of 6.4%.

CITY UNION BANK Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	74,572	84,014	12.7%
Advances	Rs m	430,533	455,257	5.7%
Deposits	Rs m	523,979	556,566	6.2%
Yield on advances	%	8.8	9.1
Cost of Deposits	%	4.4	5.2
Investments	Rs m	143,326	156,641	9.3%
Borrowings	Rs m	46,881	47,242	0.8%
Total Assets	Rs m	665,946	708,259	6.4%

Current Valuations for CITY UNION BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 13.7, an improvement from the EPS of Rs 12.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 174.4, stands at 10.5 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.5 times, while the price to income ratio stands at 2.0 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	63.7	71.2
Earnings per share (Unadj.)	Rs	12.7	13.7
Diluted earnings per share	Rs	12.7	13.7
Avg P/E ratio	Rs	12.7	10.5
Avg P/ABV ratio	Rs	1.3	1.5
Avg Market Cap	Rs	119,411	106,342
Dividends per share (Unadj.)	Rs	1.00	1.50

Ratio Analysis for CITY UNION BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio deteriorated and stood at 81.8x during FY24, from 82.2x during FY23. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 7.19x during FY24, from 7.66x during FY23. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): CITY UNION BANK's capital adequacy ratio (CAR) was at 23.7% as on 31 March 2024 as compared to 22.3% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank deteriorated and stood at 12.1% during FY24, from 12.6% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 1.43% during FY24, from 1.41% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank deteriorated and stood at 11.70% during FY24, from 12.05% during FY23. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. CITY UNION BANK's gross NPA ratio stood at 4.0% as of 31 March 2024 compared to 4.4% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of CITY UNION BANK was 2.0% in financial year 2024. This compared with 2.4% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	82.2	81.8
Debt to Equity Ratio	x	7.7	7.2
Loans / Deposits	x	0.1	0.1
Capital Adequacy Ratio	%	22.3	23.7
Return on Equity	%	12.6	12.1
Return on Assets	%	1.4	1.4
Return on Capital Employed	%	12.0	11.7
% of Gross NPAs	%	4.4	4.0
% of Net NPAs	%	2.4	2.0
Yield on Advances	x	8.8	9.1
Yield on Investments	x	5.9	6.3

To see how CITY UNION BANK has performed over the last 5 years, please visit here.

CITY UNION BANK Share Price Performance

Over the last one year, CITY UNION BANK share price has moved up from Rs 134.7 to Rs 174.4, registering a gain of Rs 39.7 or around 29.5%.

Meanwhile, the S&P BSE BANKEX is trading at 59,025.8 (up 0.3%). Over the last one year it has moved up from 51,331.3 to 59,025.8, registering a gain of 7,694.6 points (up 15.0%).

Overall, the S&P BSE SENSEX is up 23.1% over the year.

(To know more, you can check out historical annual results for CITY UNION BANK here and quarterly results for CITY UNION BANK here)