Views on Indian Overseas Bank 3QFY2014 results - Angel Broking

Views of Mr. Vaibhav Agrawal (VP- Research – Banking, Angel Broking) on Indian Overseas Bank 3QFY2014 results:

"Indian Overseas Bank reported weak set of numbers for the quarter, dragged by asset quality pressures. NII for the bank remained largely flat yoy (in spite of 10% yoy growth in advances, on back of interest reversals on slippages), while non interest income expectedly de-grew by 11.9% yoy. Pre-provisioning profit de-grew 6% yoy to Rs. 961cr, in-line with expectations. On the asset quality front, absolute Gross and Net NPA levels increased sequentially by 12% each, already on a large base. Gross and Net NPAs for the bank now stand at 5.3% and 3.2% respectively, having increased more than 200bps each over the last two years. Provisioning expenses for the bank remained flat yoy to Rs. 811cr and as a result, PCR declined 275bp qoq to 57%. Overall, the bank reported earnings de-growth of 36% yoy. Though the stock trades at near historic low valuations, on account of near term asset quality concerns emanating from its high exposure to stressed sectors and overall weak macro environment, moderate core equity tier I capital and subdued return ratios, we maintain our Neutral rating on the stock."

Indian Overseas Bank 3QFY2014 Result Update (CMP: Rs. 44, Target Price: NA, Recommendation: Neutral)

Source : Equity Bulls

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