While the bank’s income growth is hard to beat in the category, even SIB has the same quantumm of NII, though ING scores on Total Income to INR 493.5 Crores, Capital adequacy Ratio for Tier I a hardly adequate 10.99% from Basel 1 regime one fears esp with loan assets a small INR 26k crores or $5 bln and investments at less than half that at INR 11k crores, with a CASA of 32%, higher rates on FDs and CDS matched by low savings bank rates. Growth in income and profits (117 crs or $22.5 mln ) are much more respectable at 44% and brought about by reduction of Cost Income ratio to 57%
Bad debts are comparable to top tier banks at 0.33% Net NPAs. The queezing of branch staff and resources after a bing on setting up new branches with no change in savings tiers has left it with a back in the chair, nothing much approach to banking..and the bank remains a good candidate for cap appreciation yet unless promoters on both sides can commit to growing the capital at the bank, we would be looking at not just CASA stagnation but that in the assets, which should at least reach a 1 Tln figure to be respectable ($18-20 bln) to back its large real estate investments in Bangalore itself.
Meanwhile we did find a few wholesome gaps in the MOS report on the Banking sector, expecting INR 15000 crores in bad debts from ICICI Bank and a similar amount from Axis Bank in write offs an impossible to manage feat. ICICI Bank’s INR 2.35 tln book with only INR 55k in mortgages and INR 10k crores in Autoloans makes it unlikely even if bad debt was to reach 2-3% of assets or 4% of its net worth.