Yes, quite a move yesterday and a decent follow-up today too. I am not a technical trader and primarily look at price-volume action to just understand what others think. While the results were good, it was not so crazy good either. I think the key thing is to do with their business model which is not the same as most retail-focused banks. I can’t say for sure, but in the current environment, this feels like a bit of a flight to safety move as well.
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9b4374c7-9f3f-46a1-994c-887193bfbdd8.pdf (2.5 MB)
Latest CUB results. Good results but in my opinion DCB Bank performed much better in comparison to CUB. On asset quality, gross and net NPA decreases Q/Q and Y/Y basis. Why still provisions increased is yet to understand? Bank grew its business almost by 12 % when GDP is languishing on approx 6%.
Holding both CUB and DCB. Yet to hear concall which will give more clarity.
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Missed Mr. Kamakodi in the conf call (until the end) who generally gives a good qualitative view as well to questions, but Mr. Vijay Anandh covered well and was on top of the numbers!
Overall, pretty good across the board - quite a well run bank indeed. I just wish they are a bit more ambitious on their growth. While the growth numbers are good, their strong operational focus in running a tight ship and keeping slippages down seems to constrain higher growth. Maybe secured retail can boost the growth a bit more, but they are very careful to under-promise there. Let’s see if they can over-deliver on that. It was also good to hear that the MSME book is not seeing stress as things stand. Beyond the implications for the bank, it’s a good sign for the economy too.
Don’t know how the stock will do going forward, but the bank is doing quite well, and relative to most other banks, much better too.
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Lots of new branches being opened this quarter, and interestingly, most of them outside Tamil Nadu. This one https://www.bseindia.com/xml-data/corpfiling/AttachLive/0504bc59-8b74-4176-8df7-4be5b8e95ad3.pdf is just the latest in a sequence of half a dozen disclosures on branch openings that I have come across in the last couple of months. Good to see the expansion though I guess it may also have an impact on the cost-to-income ratio in Q4. Not sure what the pace of branch openings was in previous quarters, but it seems to have accelerated.
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The branch expansion continues - saw two more circulars in the last two days! Also, a good and short Q&A with the CEO https://www.youtube.com/watch?v=brfhPrXs1hA.
Positive about growth though still sticking to the 14-15% target. He remains cautious about unsecured (CUB’s unsecured portfolio is less than 1%) though they have tied up with CSK and SRH for co-branded credit cards.
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The CUB holding is not a fresh entry - they have held it for a long time and it’s at the same level for the last couple of years.
Ohh yes i just verified on screener, any idea why it is showing nothing in previous quarter.
For March 2024 and Dec 2024.
No idea, maybe some reporting issue. I have recently seen a couple of stocks (e.g. Everest Industries Ltd) that show 100% delivery on NSE everyday though it’s not the case. Even sent them an email about it, but didn’t hear back.
Pretty solid results again with NIM holding firm and asset quality in good shape as well. Strong deposit growth was the highlight for this quarter and loan growth was good too. Also indicated that loan against property (LAP) is growing well in the retail portfolio (95% secured). While retail growth is still to take off, should contribute more next year - indicated 3-4% of loan book in FY26. Other income also grew strongly, driven by commissions on various products, insurance primarily (I think). Overall, it’s been a strong year for the bank. The market’s not rewarded it as well as I had hoped, but so long as geopolitics and tariffs don’t throw a spanner in the works, FY26 should be as good or even better. Management commentary was positive, though as always, they are cautious in what they promise.
Investor presentation here - https://www.cityunionbank.com/filemanager/May25/CUB_Investor_Presentation_Mar2025.pdf
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Good read - EA Sundaram on City Union Bank
BR Core Value Newsletter May 2025.pdf (770.9 KB)
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NIMs are important, but only one piece of the puzzle. There are other factors that are just as important, if not more - growth metrics, asset quality, RoA, CASA share among others. We have to look at it holistically. Also, how the prospects of each bank stack up relatively as well, for the coming 6-12 months.
CUB has done well, close to the Rs.200 I was expecting. I don’t know whether it will rise more or fall again to slightly lower levels, but fundamentally, the business is doing fine at present.
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