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Dolat Capital Report
City Union Bank Ltd. reported flat net interest income and de-growth in core pre-provision operating profit of 3% YoY, impacted by weaker than expected net interest margin and lower fee income/limited recoveries from written-off accounts.
Profit after tax however benefitted from lower provisions, growing by 15% YoY. Caution on lending continued, with incremental growth mostly coming from agri gold loans (14% QoQ).
City Union Bank's asset quality metrics continued to improve with sequential decline in slippages to 2.9%, sharp uptick in recoveries and upgrades, and continued decline in special mention account-II ratio (including accounts more than Rs 50 million exposure) to 2.1%.
Slippages were impacted by Reserve Bank of India's November circular on non-performing asset classification norms (by Rs 500-600 million) during the quarter and should largely normalise from Q4 FY22.
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