Buy ING Vysya Bank - Q4 FY 2011 Result Update - Motilal Oswal

ING Vysya Bank (VYSB IN; Mkt Cap USD1b, CMP Rs359, Buy)

Loans grew 28% YoY and 10% QoQ to ~Rs236b. Sequentially, wholesale banking grew ~13% and business banking (a key focus area of the bank) grew 10%.

Deposits grew 17% YoY and 11% QoQ. CASA deposits grew 24% YoY and 15% QoQ. CASA ratio improved ~120bp QoQ to ~35%.

Reported NIMs improved 20bp QoQ (a positive surprise) led by strong loan growth and higher yield on investment.

Fee income grew ~18% QoQ and 17% YoY to ~Rs1.6b. Opex grew 37% YoY and 17% QoQ led by 54% YoY and 21% QoQ increase in employee expenses.

In absolute terms GNPA declined 2% QoQ to Rs5.5b and in percentage terms GNPA improved 30bp QoQ. In 4QFY11 slippages were Rs440m.

IVB is a play on improving return ratios led by improvement in core operating performance and balance sheet profile. IVB trades at 10.9x FY12E and 8.7x FY13E EPS and P/BV of 1.5x FY12E and 1.3x FY13E BV. Improvement in RoEs will be a key driver of the stock's re-rating. Buy with a target price of Rs490 (1.8x P/BV FY13E).

Source : Equity Bulls

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