Analysis on IOB, Syndicate bank, UCO and Allahabad bank

Provisioning dampens profit growth in banks:

Both public and private sector banks have started declaring their FY11 and last quarter results and most bank results are on the expected lines of the market. On Saturday, public sector banks like IOB, Syndicate Bank, Allahabad Bank and Uco Bank have declared their results. All the banks have witnessed higher provisioning for NPA.

INDIAN OVERSEAS BANK:

IOB has reported a 22o basis point increase in its March quarter 2012 of RS.528.81 cr against Rs.434.3 cr for the corresponding quarter of previous year. Even though the bank has posted a decent profit growth along with a good increase in CASA and lending to priority sectors, its NPA has increased by more than 25 per cent to Rs.3920 cr against Rs.3089 cr in the previous year. This stock may witness a hectic activity on Monday with much risk on downside.

Syndicate Bank:

The bank has reported a net profit of Rs.390.43 cr, a growth of 7 per cent compared to last quarter of previous year. Syndicate bank has made an aggressive provisioning of Rs.542 cr to bring down its NPA level to 0.96 per cent. The bank is able to maintain its NII to decent level of 16 per cent growth to Rs.5085 cr. The bank has reported a full year income of Rs.4424.33 cr against Rs.3416.60 cr in the same period last year.

Uco Bank:

Uco Bank has posted a 12 per cent growth of Rs.253 cr in its March ended quarter corresponding to last quarter of 2010-11. It’s been noted that the bank is mainly thriving towards de-risking its balance sheet by reducing its percentage of advances to corporate sector to retail segment. As of now, the bank’s corporate lending accounts for more than 60 per cent of total lending. Further the bank has stated it has witnessed higher NPA provisioning in sector like aviation, steel, power and infrastructure. With a Net Interest Income growth of 25 per cent, the bank stock is a good bet to invest for a longer period term.

Allahabad Bank:

With lower provisioning towards bad loans an a good growth witnessed in NII, the bank has posted a 55 per cent increase in net profit at Rs.400 cr compared with Rs.258 cr for the last quarter of FY11. The bank has proposed a good dividend of 60 per cent for 2011-12. This is another banking counter which has potential for a good return from a medium term perspective.