City Union Bank Ltd Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Mona P. Khetan - Dolat Capital Market Private Limited - Analyst : Good evening. So my first question is on growth. So if I got it right from your opening remarks you're saying that a guidance for FY24 has been maintained at 12% to 14%?

Question: Mona P. Khetan - Dolat Capital Market Private Limited - Analyst : Okay. Got that. And secondly, you mentioned about the FITL impact which hurt your yields in Q3. So could you just elaborate a bit what exactly has happened here and how that has resulted in interest impressive?

Question: Mona P. Khetan - Dolat Capital Market Private Limited - Analyst : Got that. Okay, because of some restructured book turning into NPA. Got it. I'll come back in the queue.

Question: Mohit Jain - Tara Capital Partners India Pvt Ltd. - Analyst : I have further question on the growth guidance that you're talking about? I think you said, we will be somewhere in near to double-digit. So that means that we have to effectively get a growth rate of 8% to 9% in this quarter, which seems very difficult and which seems very optimistic considering the fact that past three quarters it has been a negative growth to a very low single-digit growth of 2% to 3%. So what makes us optimistic about achieving that 9%or 8%-9% growth or so? And how has been the progress in the month of January. So we don't get any comfort on this number?

Question: Mohit Jain - Tara Capital Partners India Pvt Ltd. - Analyst : Okay. Just one follow. -- We are targeting?

Question: Mohit Jain - Tara Capital Partners India Pvt Ltd. - Analyst : Yeah, what is the deposit growth that we're targeting for the year?

Question: Franklin Moraes - Equentis Wealth Advisory Pvt Ltd. - Analyst : Thanks for taking my question. So could you please, maybe elaborate on this Y-O-Y growth I wasn't very clear because at the start you mentioned 10% to 15%. So does that hold true?

Question: Franklin Moraes - Equentis Wealth Advisory Pvt Ltd. - Analyst : Okay, sir. And also you had guided on lower NPAs by March 2024. So does that, you know, hold true? And is there any visibility beyond that as well? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 01, 2024 / 12:30PM, CTBK.NS - Q3 2024 City Union Bank Ltd Earnings Call

Question: Franklin Moraes - Equentis Wealth Advisory Pvt Ltd. - Analyst : So what I was trying to understand is this improvement is it likely last only one quarter wherein we see better recoveries and upgrades? Or could there be more? At least for not less than three, four quarters.

Question: Arul Selvan - Independent Advisors Private Limited - Analyst : I just wanted to understand a little bit more about the changes that have been implemented to bring about digital lending. You are talking about the project that was advised by BCG Red. Could you just give us a little bit more color on and what kind of changes have been, what kind of initiatives have been taken by the bank so far?

Question: Arul Selvan - Independent Advisors Private Limited - Analyst : That's great to hear. I was actually trying to understand whether this would impact this would have some sort of an impact on the core quality of the underwriting team. Would it aid the team or would it have no difference? Is there a moment to understand if the automation also includes, you know, a component which affects the quality of the underwriting for others that remain the same. Does it-- ?

Question: Arul Selvan - Independent Advisors Private Limited - Analyst : That's very helpful. So thank you very much. I will get back into the queue if I have any further questions.

Question: Chintan Shah - ICICI Securities Limited - Analyst : Thank you for the opportunities. First question on the growth guidance. So if we look for FY25, so like we mentioned, we are seeing a growth of 1% now and 1% per month. So FY25, can we assume a growth rate in double digit like around a 12% -- 15%, or is that a reasonable assumption -- FY25?

Question: Chintan Shah - ICICI Securities Limited - Analyst : Sure. So just to add on that, if we assume like 15% loan growth for '25, so correspondingly, we would also -- we need a similar kind of deposit growth to meet demand -- [strong] growth demand. And currently for this year, our deposit growth is roughly around flat on a YTD basis. And despite that the cost of deposit has there been a massive spike. So how do we make sure there will be able to raise that even deposits of around 15% YoY growth and that cost of deposits -- how would that be impacted then? Would that also see a spike continuing or will that be stable? Any thoughts on that?

Question: Chintan Shah - ICICI Securities Limited - Analyst : Sure, sir. I guess what I was just trying to understand that, assuming that we have an (technical difficulty) growth on FY25, so then our margins should not be a dampener in any case. By way of yield on advances or by way of cost of deposits, if there is a spike in our cost of deposits or the decline in the yields and again, the margin could be under pressure. Can that be a case or not?

Question: Chintan Shah - ICICI Securities Limited - Analyst : Sure, sir. And just one last question from my end. This is a (technical difficulty) question. Sir, what would be the total provision on the restructured portfolio which we have of around INR1,000 crores?

Question: Chintan Shah - ICICI Securities Limited - Analyst : Sure, sir. And sir, we have made some contingent provisions during the quarter. So what would be on that regarding -- any specific or it was on general practices that we're following?

Question: Chintan Shah - ICICI Securities Limited - Analyst : Okay. And sir, COD, actually the cost of deposits during the quarter has seen a steep hike. So there are no one-offs to that, right? It's just normal 60 (multiple speakers)

Question: Neel Mehta - Investec Capital Solutions - Analyst : Yes, hi, good evening. Thanks for the opportunity. So post the divergent report by the RBI last year, have there been any subsequent comments we've (technical difficulty) on the bank systems or the way the business model is being done in the course of the RBI (technical difficulty)?

Question: Neel Mehta - Investec Capital Solutions - Analyst : Got it, sir. And secondly, we are hearing the regulator commenting on the business models of banks increasing, especially in the sense that a bank that has higher geography concentration or product concentration that they've been given (technical difficulty) sort of.

Question: Neel Mehta - Investec Capital Solutions - Analyst : (multiple speakers) Sir, we are seeing the RBI commenting increasingly on the business models of bank. And so considering our bank is geographically concentrated and in terms of product concentration also we probably have one [hero] product that accounts for most of our book. Have we received any feedback from the regulator to diversify our business, not just in terms of geography outside of Tamil Nadu, but also in terms of the product mix, which is currently heavily skewed towards the MSME and trade loans? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 01, 2024 / 12:30PM, CTBK.NS - Q3 2024 City Union Bank Ltd Earnings Call

Question: Neel Mehta - Investec Capital Solutions - Analyst : So no specific direction from the RBI basically?

Question: Neel Mehta - Investec Capital Solutions - Analyst : Got it, sir. Thank you. Those are my two questions. Thank you.