Showing posts with label care. Show all posts
Showing posts with label care. Show all posts

Wednesday, March 12, 2014


CARE Ratings, since its inception in April 1993,  has completed over 23263 rating assignments having aggregate value of about Rs. 48250 bn as of March 31, 2013.

Wednesday, February 17, 2010


The Kolkata based public sector bank floating an initial public offer of 5,00,00,000-equity shares of Rs 10/- each in the price band of Rs 60-66. SBI Capital Markets Limited, Edelweiss Capital Limited and Enam Securities Private Limited are the BRLMs. The issue opens 23-02-10 and closes 25-02-10.

The government has restructured the Bank’s capital to enable the bank to improve its valuation per share. Accordingly, the paid up capital has been reduced from Rs 1532cr to Rs 266cr. United Bank of India is one of the 14 banks, which were nationalised in 1969. The bank has presence in 28 States and in 4 Union Territories in India. As of December 2009, the bank had 1,484 branches, 265 ATMs, 28 regional offices.
The Bank is currently wholly owned by the Government of India. The Government, post issue will hold 84.20 % of the diluted equity of the bank.

The Core Banking Solution (CBS), which is a suite of software applications that facilitate centralised operations through a single data base, has been implemented in all the branches and extension counters, covering 100% of the bank’s business.

The Current and Saving Account (CASA) Deposits advantage:

The bank traditionally maintained high CASA deposits because of the large retail customer base spread across India, particularly in eastern and northeastern regions. As of September 30, 2009, the share of CASA deposits was at 33.95% of total deposits, out of which saving deposits, which are less volatile, accounted for 26.41% of total deposits, while current deposits accounted for 7.55% of total deposits. This provides the bank with significant cost advantages over other players. According to RBI’s report on ‘profile of banks’ (2008-2009), United bank’s cost of funds for Fiscal 2009 was 5.78%, which was lower than the average cost of funds of nationalised banks (6.18%) and all banks in India (6.05%) for the same period.


The objects of the Issue are to augment the capital base to meet the future capital requirements arising out of the growth in assets.

FINANCIALS: 07 08 09 (Rs in crores)

TOTAL INCOME 3122.77 4022.80 4802.73

NET PROFIT 267.28 145.11 358.55

EPS (RS) 1.74 0.95 2.34

RONW (%) 14.18 7.36 14.13

DIVIDEND PAYMENT (RS) 45.97cr 45.97cr 45.97cr

Net Asset Value per Equity Share as of March 31, 2009: Rs. 14.93

Comparison with other mid sized public sector banks

EPS (Rs.) P/E RoNW (%) Book Value/ Share

United bank 2.34 -- 14.13 14.93
Andhra Bank 12.70 8.20 18.94 75.20
Bank of Maha 8.40 6.00 19.59 48.00
Dena Bank 14.5 5.70 24.05 67.90
Indian Bank 27.1 6.20 24.09 127.50
Vijaya Bank 5.9 8.70 11.86 53.50

Pre and post-Issue Equity Shares (Restructured Capital)
Equity Shares outstanding prior to the Issue 26, 64, 30,800 Equity Shares
Equity Shares outstanding after the Issue 31, 64, 30,800 Equity Shares


The results of operations depends to a significant extent on net interest income, and volatility in interest rates and other market conditions could materially and adversely impact the business. With the base rate regime set to rule from April next, net interest margin (NIM) will determine the ground for efficiency of banks. The margins will be under pressure since the base rate is likely to be fixed 300 bps to 400 bps below the existing BPLR across banks.

Banks are required by the RBI to maintain a minimum capital adequacy ratio of 9.0% in relation to our total risk-weighted assets. The required capital adequacy ratio was 10.37% (Basel I) and 12.93% (Basel II) as of September 30, 2009.

Major part of the branch network is concentrated in eastern and northeastern India and thereby exposing the bank to regional risks. As of December 2009, out of our 1484 branches, 955 branches are located in eastern India and 256 branches are located in northeastern India.

Banks faces rapid technological changes in the highly competitive banking business, the success depends on the ability to compete with other banks and to respond to technological advances and emerging banking industry standards and practices on a cost-effective and timely basis. The development and implementation of such technology entails significant technical and business risks.

Consolidation in the banking sector in India may adversely affect the Bank.The Government has expressed a preference for consolidation in the banking sector in India. Mergers among public sector banks may result in enhanced competitive strengths in pricing and delivery channels for merged entities. The Bank may face greater competition from larger banks because of such consolidation, which may adversely affect the Bank’s future financial performance.

One more challenge for the public sectors banks are their ability to continue to maintain and grow a pool of experienced professionals, particularly in the field of credit evaluation, risk management, treasury, technology and marketing.

Retail Banking

Retail banking has immense opportunities in a growing economy like India. As the growth story gets unfolded in India, retail banking is going to emerge a major driver.
The rise of the Indian middle class is an important contributory factor in this regard. The percentage of middle to high-income Indian households is expected to continue rising. The younger population not only wields increasing purchasing power, but as far as acquiring personal debt is concerned, they are perhaps more comfortable than previous generations. Improving consumer purchasing power, coupled with more liberal attitudes toward personal debt, is contributing to India's retail banking segment. Some of the key policy issues relevant to the retail-banking sector are financial inclusion, responsible lending, access to finance, long-term savings, financial capability, consumer protection.

Information technology poses both opportunities and challenges. Even with ATM machines and Internet Banking, many consumers still prefer the personal touch of their neighborhood branch bank. Technology has made it possible to deliver services throughout the branch bank network, providing instant updates to checking accounts and rapid movement of money for varied purposes. Specific challenges include ensuring that account transaction applications run efficiently between the branch offices and data centers.


The bank is likely to post an EPS of Rs 13/- (on the restructured post issue capital of Rs 316.43 cr). At Rs 66 (upper end), the valuation comes to 5x of the annualized earnings of FY 10.The rating agency CARE has assigned grade-4 for the issue indicating above average fundamentals. Compares well with the mid sized public sector banks. Bankable issue. INVEST.