ING Vysya Bank’s (VYSB) 2QFY15 PAT was 9% above estimate at INR1.8b (+2% YoY) led by better-than-expected NIM (+10bp) and lower provisioning. Reported NIM improved 17bp QoQ to 3.54%. However, adjusted for interest reversal on account of stressed accounts in 1QFY15, NIM was stable QoQ at 3.54%.

1. 28 October 2014
2QFY15 Results Update | Sector: Financials
ING Vysya Bank
Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415
Vallabh Kulkarni (Vallabh.Kulkarni@MotilalOswal.com); +91 22 3982 5430
BSE SENSEX
S&P CNX
CMP: INR641
TP: INR695
Neutral
26,881
8,028
Bloomberg
VYSB IN
Equity Shares (m)
190.4
M.Cap. INR b/USD b
122.1/2.0
52-Week Range (INR)
723/493
1, 6, 12 Rel. Per (%)
7/-8/-21
Financials & Valuation (INR Billion)
Y/E Mar
2015E
2016E
2017E
NII
20.0
23.1
27.3
OP
13.3
15.8
19.3
NP
7.1
8.3
10.5
EPS (INR)
37.4
43.8
55.5
EPS Gr. (%)
7.2
17.0
26.7
BV/Share
399.2
434.1
478.2
P/E (x)
17.1
14.6
11.5
P/BV (x)
1.6
1.5
1.3
RoE (%)
9.7
10.5
12.2
ROA (%)
1.1
1.1
1.1
 ING Vysya Bank’s (VYSB) 2QFY15 PAT was 9% above estimate at INR1.8b (+2% YoY) led by better-than-expected NIM (+10bp) and lower provisioning. Reported NIM improved 17bp QoQ to 3.54%. However, adjusted for interest reversal on account of stressed accounts in 1QFY15, NIM was stable QoQ at 3.54%.
 Sale to ARCs of INR4.4b led to a sharp fall in GNPAs to INR6.4b (INR9.3b in 1Q). At the time of sale, VYSB took 60% mark down to NPAs sold. Slippages for 2QFY15 were at INR1.9b (2.4% annualized) declined from INR5.4b in 1QFY15. Bank restructured INR 730m during the quarter. OSRL stood at INR5.5b (1.4% of loans).
 CASA ratio improved 320bp QoQ to 33.1% led by CA deposits (+21% QoQ). Incremental CASA ratio for 2Q stood at 90%, resulting in 12bp QoQ decline in CoD.
 Other highlights: (1) Fee income grew 11% QoQ to INR2.2b (+22% YoY). However, adjusted for Wealth Management & Advisory, fee growth was muted, (2) customer assets grew 21% YoY (+3% QoQ) led by strong pick-up in Agri and Rural banking segment (+16% QoQ and +46% YoY). PL and Gold loans also showed a healthy pick-up.
 Valuation and view: While continued operating leverage will lead to better profitability, we expect some drag in revenue growth due to flat-to-marginal decline in NIM and moderate fees. We lower the earnings estimates by ~4% to factor the lower-than-expected non interest income. RoA/RoE is expected to be ~1.1%/~12% for FY16E/17E. Asset quality remains one of the critical factors to sustain RoA. We may further revise the estimates post earnings conference call. The stock trades at 1.5x FY16E BV and 14.6x FY16E EPS. Maintain Neutral.
Investors are advised to refer through disclosures made at the end of the Research Report.

2. 28 October 2014 2
ING Vysya Bank
Quarterly performance (INR m)
Y/E MARCH
2QFY15A
2QFY15E
Var. (%)
Comments
NII
4,969
4,821
3
Reported NIM improved 17bp QoQ
% Change (Y-o-Y)
13
9
Other Income
2,286
2,355
-3
Lower than expected ex-fee non-interest income performance
Net Income
7,255
7,176
1
Operating Expenses
4,059
3,968
2
Operating Profit
3,196
3,208
0
PPP in-line with estimate
% Change (Y-o-Y)
16
16
Other Provisions
497
750
-34
NPA provisions significantly lower than expected
Profit before Tax
2,700
2,458
10
Tax Provisions
898
811
11
Net Profit
1,801
1,647
9
Lower provisions to an extent compensated by higher taxes leading to 9% higher PAT
% Change (Y-o-Y)
2
-7
Source: MOSL, Company
Reported NIM expands 17bp; Strong traction in CASA deposits
 Reported NIM improved 17bp QoQ to 3.54%. However, adjusted for interest reversal on account of stressed accounts in 1QFY15, NIM was stable QoQ.
 CASA ratio improved 320bp QoQ to 33.1% led by 21% QoQ growth in CA deposits. Deposit growth during the quarter was mainly driven by CASA deposits, with 90% Incremental CASA ratio in 2QFY15, resulting in 12bp QoQ decline in cost of deposits to 7.28%.
 SA deposits growth was also strong (+13% QoQ and +19% YoY).
 Certificate of deposits declined 28% QoQ to INR 39.4b (8.8% of total deposits).
Asset quality improves QoQ led by sale to ARCs
 GNPA declined 32% QoQ to INR 64b led by sale to ARCs of INR 4.4b in 2QFY15. GNPA in % terms stood at 1.6% (2.4% in 1QFY15). NNPA declined to 0.4% (v/s 0.9% in 1QFY15) as PCR improved by ~1000bp QoQ to 74%.
 Gross slippages for the quarter stood at INR 1.9b (annualized slippage ratio of 2.4%) as compared to INR5.4b in 1QFY15. Of the total gross slippage, ~INR 730m slipped and was sold to ARC in 2QFY15.
 During the quarter, bank restructured loans of INR 730m and outstanding restructured loan portfolio stood at INR5.5b (1.4% of loans). Slippages from restructured book stood at INR 470m in 2QFY15.
Strong growth in Agri and rural segment drives customer assets growth
 Customer assets grew 3% QoQ and 21% YoY led by strong growth of 16% QoQ and 46% YoY in agri and rural segment (formed 10.2% of overall customer assets as compared to 9.1% in 1QFY15).
 SME segment which forms 36% of overall customer assets also witnessed robust growth of 20% YoY (+6% QoQ).
 Consumer banking segment grew 8% YoY (+4% QoQ) led by (1) moderation in mortgage portfolio (+6% YoY and +2.5% QoQ) (2) sequential decline in CV whereas (3) Personal loan grew 20% QoQ and 69% YoY.
 Wholesale segment declined 3% QoQ (+22% YoY) and now forms 36% of loan book.
Adjusted NIM stable QoQ at 3.54%
GNPA improved to 1.6% from 2.4% in 1QFY15
Customer assets grew 21% YoY and 3% QoQ

3. 28 October 2014 3
ING Vysya Bank
Fee income growth picks up led by strong advisory fees
 Fee income grew 11% QoQ to INR 2.2b (+22% YoY). However, ex-Wealth Management & Advisory fees (+132% YoY), fee income growth was muted.
 Asset related fee grew 28% YoY (-21%QoQ), Liability related (+11% YoY and -9% QoQ) and forex income declined 22% YoY and 30% QoQ. Trading income declined 21% YoY whereas increased QoQ (low base of INR97m in 4QFY14) to INR215m.
 Core fee income grew 40% YoY (+10% QoQ) led by healthy growth in Wealth Management & Advisory fees.
Other highlights
 Bank also informed that Mr. Shailendra Bhandari has stepped down from the post of MD & CEO. The bank’s board has proposed the appointment of Mr. Uday Sareen (currently deputy CEO) as MD & CEO of the bank, subject to approval from RBI.
 VYSB received one-off current account deposits of INR8b towards the end of 2QFY15, which was parked in short term investments, resulting in +13% QoQ investment book growth in 2QFY15.
Valuation and view
 While continued operating leverage will lead to better profitability, we expect some drag in revenue growth due to flat to marginal decline in NIMs and moderate fees.
 Asset quality has remained one of key aspect of earnings for the bank and has provided boost to RoA (+ve impact of 0.5% over FY10/14). However, continued higher slippages is concerning.
 We downgrade earnings by ~4% to factor in lower than expected non interest income. RoA/RoE is expected to be ~1.1%/~12% for FY16/17E. Asset quality remains as one of the critical factors for sustenance of RoA’s. We may further revise earnings estimate post earnings conference call.
 The stock trades at P/BV of 1.5x of FY16E BV of INR434 and 1.3x FY17E BV of INR477. Maintain Neutral.
We cut our earnings estimates by 4% to factor in weak non-interest income performance
INR B
Old Est.
Revised Est.
% Change
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
NII
19.5
22.5
27.0
20.0
23.1
27.3
2.4
2.6
1.3
Other Income
10.4
12.0
14.1
9.6
11.4
13.5
-8.1
-5.5
-4.5
Total Income
29.9
34.6
41.1
29.6
34.5
40.8
-1.3
-0.2
-0.7
Operating Expenses
16.1
18.6
21.3
16.3
18.7
21.5
0.9
0.9
0.9
Operating Profits
13.8
16.0
19.8
13.3
15.8
19.3
-3.9
-1.6
-2.5
Provisions
2.8
3.2
4.0
2.7
3.4
4.2
-5.2
3.6
3.3
PBT
11.0
12.8
15.8
10.6
12.4
15.1
-3.5
-2.9
-4.0
Tax
3.6
4.2
5.2
3.5
4.2
5.1
-2.8
-1.4
-2.5
PAT
7.3
8.6
10.6
7.1
8.3
10.1
-3.9
-3.6
-4.7
Margins (%)
3.3
3.3
3.2
3.4
3.3
3.2
Credit Cost (%)
0.7
0.6
0.6
0.6
0.6
0.6
RoA (%)
1.1
1.2
1.2
1.1
1.1
1.1
RoE (%)
10.1
10.8
12.2
9.7
10.5
11.7
The stock trades at 1.5x FY16E BV of INR434 and 1.3x FY17E BV of INR477.

4. 28 October 2014 4
ING Vysya Bank
Source: MOSL, Company

5. 28 October 2014 5
ING Vysya Bank
One year forward P/BV
Source: MOSL, Company
One year forward P/E
Source: MOSL, Company
DuPont Analysis: Higher NPA provisioning leading to stable ROA despite operating leverage playing out and fees pick up (%)
Y/E March
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
Net Interest Income
2.99
2.47
2.22
2.26
2.52
2.76
2.81
3.02
3.04
3.09
3.05
2.98
Core Fee Income
0.83
0.98
1.49
1.53
1.20
1.21
1.13
1.01
0.95
1.06
1.09
1.10
Fee to core Income (%)
21.42
24.25
36.40
36.78
27.25
26.48
25.81
22.76
21.00
23.12
23.96
24.63
Core Income
3.82
3.46
3.71
3.80
3.73
3.97
3.94
4.03
4.00
4.15
4.14
4.07
Operating Expenses
3.23
2.80
2.72
2.69
2.46
2.82
2.58
2.50
2.59
2.52
2.47
2.35
Cost to Core Income (%)
84.49
81.07
73.24
70.87
65.96
70.94
65.57
61.96
64.81
60.76
59.65
57.63
Employee cost
1.46
1.26
1.35
1.37
1.30
1.66
1.51
1.47
1.57
1.47
1.44
1.37
Employee to total exp (%)
45.14
45.00
49.61
50.77
53.07
59.03
58.64
58.98
60.46
58.32
58.32
58.32
Others
1.77
1.54
1.37
1.32
1.15
1.15
1.07
1.03
1.02
1.05
1.03
0.98
Core operating Profits
0.59
0.65
0.99
1.11
1.27
1.15
1.36
1.53
1.41
1.63
1.67
1.72
Non Interest income
0.87
1.59
1.87
1.91
1.89
1.80
1.56
1.43
1.50
1.48
1.50
1.47
Trading and others
0.04
0.60
0.38
0.37
0.68
0.59
0.43
0.41
0.55
0.43
0.41
0.38
Operating Profits
0.63
1.26
1.37
1.48
1.95
1.74
1.79
1.95
1.96
2.05
2.08
2.10
Provisions
0.50
0.55
0.25
0.45
0.82
0.42
0.26
0.18
0.26
0.42
0.44
0.45
NPA
0.33
0.39
0.16
0.37
0.70
0.43
0.19
0.17
0.17
0.37
0.39
0.40
Others
0.16
0.16
0.09
0.08
0.12
-0.01
0.08
0.01
0.09
0.05
0.06
0.06
PBT
0.14
0.71
1.12
1.03
1.13
1.33
1.52
1.77
1.70
1.64
1.64
1.65
Tax
0.08
0.21
0.42
0.37
0.39
0.45
0.46
0.57
0.56
0.54
0.55
0.55
Tax Rate (%)
58.77
30.34
37.59
35.93
34.80
34.15
30.25
32.00
32.72
33.25
33.50
33.50
Extra Ordinary
0.00
0.12
0.06
0.00
0.06
0.00
0.00
0.00
0.00
0.00
0.00
0.00
RoA Adjusted
0.06
0.37
0.64
0.66
0.68
0.87
1.06
1.20
1.14
1.09
1.09
1.10
Leverage (x)
19.70
18.97
18.53
19.01
17.22
15.37
13.45
12.12
10.03
8.91
9.66
10.69
RoE
1.11
7.03
11.86
12.50
11.63
13.43
14.27
14.59
11.45
9.73
10.50
11.71
Source: Company, MOSL
1.52.31.40.50.00.51.01.52.02.5 Oct-04Jan-06Apr-07Jul-08Oct-09Jan-11Apr-12Jul-13Oct-14 PB (x)Peak(x)Avg(x)Min(x) 14.928.213.26.7051015202530 Oct-04Jan-06Apr-07Jul-08Oct-09Jan-11Apr-12Jul-13Oct-14 PE (x)Peak(x)Avg(x)Min(x) Negative Earnings Cycle

6. 28 October 2014 6
ING Vysya Bank
Story in charts
Reported NIM improves 17bp QoQ (%) 3.0 3.4 3.5 3.3 3.3 3.5 3.6 3.7 3.6 3.5 3.4 3.7 3.4 3.5 1QFY122QFY123QFY124QFY121QFY132QFY133QFY134QFY131QFY142QFY143QFY144QFY141QFY152QFY15
Source: MOSL, Company
Fee income growth higher than expectation 9631,1101,2851,2801,1551,1651,2131,2071,2861,2061,3011,3641,5241,683 1.01.11.21.11.01.01.00.90.90.90.90.91.01.1 1QFY121HFY129MFY12FY121QFY131HFY139MFY13FY131QFY141HFY149MFY14FY141QFY151HFY15 Fee Income (INR b)Fee Income to avg assets (%)
Source: MOSL, Company
Improvement in loan growth continues 238249263287293300316318330329340358382396 26232322232120111398131620 1QFY121HFY129MFY12FY121QFY131HFY139MFY13FY131QFY141HFY149MFY14FY141QFY151HFY15 Loan (INR b)Growth YoY %
Source: MOSL, Company
Core CASA improves led by strong traction in CA deposits (%) 33.832.632.633.432.032.831.731.830.232.531.733.430.033.11QFY121HFY129MFY12FY121QFY131HFY139MFY13FY131QFY141HFY149MFY14FY141QFY151HFY15
Source: MOSL, Company
Cost-to-Core income ratio stable QoQ (%) 71.4 66.7 62.4 66.1 64.7 63.9 62.2 62.4 61.9 62.2 65.3 73.2 61.2 61.0 1QFY122QFY123QFY124QFY121QFY132QFY133QFY134QFY131QFY142QFY143QFY144QFY141QFY152QFY15
Source: MOSL, Company
Asset quality improves QoQ led by higher sale to ARCs 2.2 2.0 2.0 1.9 2.0 1.9 1.8 1.8 1.8 1.7 1.7 1.8 2.4 1.6 0.4 0.3 0.3 0.2 0.2 0.1 0.1 0.0 0.2 0.2 0.2 0.3 0.9 0.4 84 85 85 91 90 93 97 98 89 89 87 84 64 74 1QFY122QFY123QFY124QFY121QFY132QFY133QFY134QFY131QFY142QFY143QFY144QFY141QFY152QFY15 Gross NPA%Net NPA %PCR %
Source: MOSL, Company

7. 28 October 2014 7
ING Vysya Bank
Quarterly Snapshot
FY13
FY14
FY15
Variation (%)
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
QoQ
YoY
Profit and Loss (INR m)
Net Interest Income
3,433
3,688
4,029
4,237
4,254
4,403
4,161
4,713
4,631
4,969
7
13
Other Income
1,710
1,689
1,866
2,004
2,445
1,847
2,146
2,234
2,276
2,286
0
24
Treasury
58
44
145
63
273
-46
237
97
215
45
-79
-198
Exchange Profits
348
354
370
608
555
577
494
617
435
491
13
-15
Recovery
43
15
29
33
246
22
21
77
13
18
38
-18
Fee Income
1,155
1,165
1,213
1,207
1,286
1,206
1,301
1,364
1,524
1,683
10
40
Others
106
111
109
93
85
88
93
79
89
49
-45
-44
Total Income
5,142
5,377
5,895
6,241
6,699
6,250
6,307
6,947
6,907
7,255
5
16
Operating Expenses
2,967
3,100
3,263
3,398
3,430
3,487
3,564
4,447
3,767
4,059
8
16
Employee
1,768
1,823
1,912
2,005
2,025
2,069
2,145
2,796
2,233
2,359
6
14
Others
1,200
1,277
1,351
1,394
1,405
1,418
1,420
1,651
1,534
1,700
11
20
Operating Profits
2,175
2,276
2,633
2,843
3,269
2,764
2,743
2,500
3,140
3,196
2
16
Provisions
267
64
246
336
681
181
230
406
1,008
497
-51
175
PBT
1,908
2,213
2,387
2,507
2,588
2,583
2,513
2,094
2,132
2,700
27
5
Taxes
607
710
764
804
837
820
839
703
698
898
29
10
PAT
1,301
1,502
1,623
1,703
1,751
1,763
1,673
1,391
1,434
1,801
26
2
Asset Quality
GNPA
5,880
5,809
5,705
5,702
5,891
5,738
5,827
6,442
9,287
6,358
-32
11
NNPA
564
398
159
91
644
623
731
1,020
3,316
1,652
-50
165
GNPA (%)
2.0
1.9
1.8
1.8
1.8
1.7
1.7
1.8
2.4
1.6
-80
-13
NNPA (%)
0.2
0.1
0.1
0.0
0.2
0.2
0.2
0.3
0.9
0.4
-45
23
PCR (Calculated, %)
90.4
93.1
97.2
98.4
89.1
89.1
87.4
84.2
64.3
74.0
973
-1,512
Ratios (%)
Fees to Total Income
22.5
21.7
20.6
19.3
19.2
19.3
20.6
19.6
22.1
23.2
Cost to Core Income
64.7
63.9
62.2
62.4
61.9
62.2
65.3
73.2
61.2
61.0
Tax Rate
31.8
32.1
32.0
32.1
32.3
31.7
33.4
33.6
32.7
33.3
CASA (Reported)
32.0
32.8
31.7
31.8
30.2
32.5
31.7
33.4
30.0
33.1
Loan/Deposit
81.5
83.0
83.8
76.9
80.7
82.1
87.4
86.9
90.3
88.6
-173
651
CAR
13.4
13.0
12.5
13.2
12.8
16.8
16.9
16.8
15.2
14.4
RoA (Reported)
1.1
1.3
1.3
1.3
1.3
1.3
1.2
1.0
1.0
1.2
RoE (Reported)
12.9
14.2
14.7
15.0
14.9
10.4
9.5
7.9
8.0
9.7
Margins (%) - Reported
Yield on loans
12.0
11.9
11.8
11.9
11.7
11.7
11.5
11.7
11.5
11.5
3
-18
Cost of deposits
7.5
7.3
7.1
7.1
7.2
7.3
7.3
7.2
7.4
7.3
-12
-1
Margins
3.3
3.5
3.6
3.7
3.6
3.5
3.4
3.7
3.4
3.5
17
8
Balance Sheet (INR B)
Loans
293
300
316
318
330
329
340
358
382
396
4
20
Investments
138
135
143
183
166
176
168
167
179
203
13
15
Deposits
359
362
377
413
409
400
390
412
423
447
6
12
CASA Deposits
120
119
119
134
123
130
135
138
126
148
17
13
of which Savings
53
55
54
61
56
61
61
68
64
73
13
19
Current
66
63
65
73
67
69
74
70
62
75
21
8
Borrowings
64
55
64
65
66
66
86
97
100
100
0
53
Total Assets
487
480
507
548
545
554
568
604
616
646
5
17
Franchise
Branches (Excl Extn Counters)
527
527
532
542
547
549
551
553
563
573
ATM
446
447
453
500
542
618
628
638
640
635
Source: MOSL, Company

8. 28 October 2014 8
ING Vysya Bank
Financials: Valuation Matrix60.02RatingCMP McapDividend(INR)(USDb)FY16FY17FY16FY17FY16FY17FY16FY17FY16FY17FY16FY17Yield (%) # ICICIBC*Buy1,60130.8117.8143.611.29.06657702.01.71.91.916.217.11.6HDFCBBuy89535.853.665.816.713.62563063.52.92.02.022.823.41.0AXSBBuy42416.636.743.311.59.82202561.91.71.81.717.918.11.1KMB*Neutral1,08313.948.959.822.218.13223813.42.81.91.914.115.00.1YESBuy6414.458.975.810.98.53283882.01.71.71.719.421.21.3IIBBuy6976.143.354.416.112.82282733.02.51.91.920.521.70.7VYSBNeutral6412.045.455.914.111.54374811.51.31.21.210.812.21.1FBBuy1402.012.915.410.99.1991111.41.31.21.113.614.61.6J&KBKBuy1411.125.228.45.65.01521740.90.81.31.317.617.42.8SIBBuy270.64.35.36.45.230340.90.80.90.915.016.52.6Private Aggregate113.414.812.22.52.1SBIN (cons)*Buy2,65633.0321.0433.87.95.82,3472,7021.10.90.91.014.417.01.5PNBBuy9215.6156.3203.95.94.51,1931,3730.80.70.80.913.915.91.3BOINeutral2722.960.176.04.53.64785450.60.50.50.613.314.82.2BOBNeutral9216.6146.1170.86.35.49781,1090.90.80.80.815.816.42.8CBKBuy3863.081.2107.24.83.66267090.60.50.60.713.616.13.3UNBKBuy2322.440.248.75.84.83303700.70.60.60.712.813.92.3OBCBuy2791.455.673.15.03.85045600.60.50.60.711.513.83.2INBKBuy1651.328.132.05.95.22883120.60.50.60.610.110.72.8CRPBKNeutral3300.961.974.25.34.46877450.50.40.40.49.310.42.5ANDBNeutral780.812.813.46.15.81651740.50.40.40.38.07.93.5IDBINeutral681.814.419.74.73.51571730.40.40.60.79.511.92.3DBNKNeutral630.613.616.84.63.81371500.50.40.50.510.311.73.3Public Aggregate61.47.55.90.90.8HDFC*Buy1,04727.2384617.112.61661924.03.02.52.523.824.81.5LICHFBuy3382.8323910.48.61982291.71.51.41.417.618.41.5DEWHBuy3540.862765.74.63594161.00.91.31.318.419.72.8IHFLBuy3962.464776.25.21571732.52.34.24.131.432.57.2IDFCNeutral1463.7141610.79.41091211.10.92.52.512.513.01.9RECLBuy2894.865774.43.72983571.00.83.43.423.923.63.8POWFBuy2836.259694.84.12953461.00.83.23.121.521.63.7SHTFBuy8913.4901059.88.55146041.71.52.62.818.519.50.9MMFSNeutral2872.7202414.111.91171342.42.12.92.918.519.11.4BAFBuy2,8152.320824513.511.51,1231,3282.52.12.92.820.120.01.2NBFC Aggregate56.311.79.92.21.9*Multiples adj. for value of key ventures/Investments; For ICICI Bank and HDFC Ltd BV is adjusted for investments in subsidiaries# Div Yield based on FY14 declared dividend; UR: Under ReviewEPS (INR)P/E (x)BV (INR)RoA (%)RoE (%)P/BV (x)
EPS: MOSL forecast v/s consensus (INR)
MOSL Consensus Variation
Forecast Forecast (%)
FY15 37.4 41.5 -9.8
FY16 43.8 51.6 -15.2
Shareholding pattern (%)
Sep-14 Jun-14 Sep-13
Promoter 42.7 42.9 43.4
DII 15.9 15.0 13.6
FII 27.8 28.2 28.9
Others 13.6 14.0 14.1
Stock performance (1-year)
480560640720800Oct-13Jan-14Apr-14Jul-14Oct-14ING Vysya BankSensex -Rebased

9. 28 October 2014 9
ING Vysya Bank
Financials and valuation
Income Statements (INR Billion)
Y/E Mar
2014
2015E
2016E
2017E
Interest Income
52.1
58.4
67.6
82.4
Interest Expense
34.5
38.4
44.5
55.1
Net Interest Income
17.5
20.0
23.1
27.3
Change (%)
13.9
13.9
15.8
18.1
Non Interest Income
8.7
9.6
11.4
13.5
Net Income
26.2
29.6
34.5
40.8
Change (%)
15.7
12.8
16.7
18.3
Operating Expenses
14.9
16.3
18.7
21.5
Pre Provision Profits
11.3
13.3
15.8
19.3
Change (%)
13.6
17.7
18.9
22.3
Provisions (excl tax)
1.5
2.7
3.4
3.6
PBT
9.8
10.6
12.4
15.7
Tax
3.2
3.5
4.2
5.3
Tax Rate (%)
32.7
33.3
33.5
33.5
Profits for Equity SH
6.6
7.1
8.3
10.5
Change (%)
7.3
7.2
17.0
26.7
Equity Dividend (Incl tax)
1.3
1.4
1.7
2.1
Core PPP*
10.1
12.4
14.7
18.2
Change (%)
10.1
22.9
18.6
24.0
Balance Sheet (INR Billion)
Y/E Mar
2014
2015E
2016E
2017E
Equity Share Capital
1.9
1.9
1.9
1.9
Reserves & Surplus
68.8
74.4
81.0
89.3
Net Worth
70.7
76.3
82.9
91.2
Deposits
412.2
478.1
592.9
735.1
Change (%)
-0.3
16.0
24.0
24.0
of which CASA Dep
137.6
157.6
185.9
219.0
Change (%)
2.4
14.6
17.9
17.8
Borrowings
96.7
106.2
123.2
143.2
Other Liabilities & Prov.
24.6
27.2
31.4
36.2
Total Liabilities
604.1
687.8
830.4
1,005.9
Current Assets
58.3
31.3
36.7
45.1
Investments
167.2
197.3
226.9
260.9
Change (%)
-8.5
18.0
15.0
15.0
Loans
358.3
437.1
542.0
672.1
Change (%)
12.8
22.0
24.0
24.0
Fixed Assets
5.2
5.4
5.6
5.7
Other Assets
15.1
16.6
19.1
22.0
Total Assets
604.1
687.8
830.4
1,005.9
Asset Quality (INR Billion)
Y/E Mar
2014
2015E
2016E
2017E
GNPA
2.6
1.3
1.4
1.3
NNPA
1.0
0.6
0.4
0.1
GNPA Ratio
0.7
0.3
0.3
0.2
NNPA Ratio
0.3
0.1
0.1
0.0
PCR (Excl Tech. write off)
61.2
55.5
68.1
93.7
PCR (Incl Tech. Write off)
84.2
92.3
95.6
99.3
Ratios
Y/E Mar
2014
2015E
2016E
2017E
Spreads Analysis (%)
Avg. Yield-Earning Assets
9.8
9.8
9.6
9.6
Avg. Yield on loans
11.2
10.9
10.4
10.4
Avg. Yield on Investments
8.0
8.0
7.6
7.6
Avg. Cost-Int. Bear. Liab.
7.0
7.0
6.8
6.9
Avg. Cost of Deposits
6.6
6.8
6.5
6.6
Interest Spread
2.8
2.8
2.7
2.7
Net Interest Margin
3.3
3.4
3.3
3.2
Profitability Ratios (%)
RoE
11.4
9.7
10.5
12.2
RoA
1.1
1.1
1.1
1.1
Int. Expense/Int.Income
66.3
65.8
65.8
66.8
Fee Income/Net Income
31.0
30.4
30.9
31.4
Non Int. Inc./Net Income
33.1
32.4
33.0
33.1
Efficiency Ratios (%)
Cost/Income*
57.0
55.1
54.3
52.8
Empl. Cost/Op. Exps.
60.5
58.3
58.3
58.3
Busi. per Empl. (Rs m)
75.8
79.5
89.6
105.9
NP per Empl. (Rs lac)
0.7
0.7
0.7
0.9
Asset-Liabilty Profile (%)
Loans/Deposit Ratio
86.9
91.4
91.4
91.4
CASA Ratio
33.4
33.0
31.4
29.8
Investment/Deposit Ratio
40.6
41.3
38.3
35.5
G-Sec/Investment Ratio
62.8
60.6
65.3
70.4
CAR
16.8
15.8
14.0
12.6
Tier 1
14.6
13.7
12.2
11.0
Valuation
Y/E Mar
2014
2015E
2016E
2017E
Book Value (INR)
369.5
399.2
434.1
478.2
Change (%)
26.5
8.1
8.7
10.2
Price-BV (x)
1.7
1.6
1.5
1.3
Adjusted BV (INR)
365.7
397.0
432.4
477.9
Price-ABV (x)
1.7
1.6
1.5
1.3
EPS (INR)
34.9
37.4
43.8
55.5
Change (%)
-11.9
7.2
17.0
26.7
Price-Earnings (x)
18.3
17.1
14.6
11.5
Dividend Per Share (INR)
6.1
6.5
7.7
9.7
Dividend Yield (%)
0.9
1.0
1.2
1.5

10. 28 October 2014 10
ING Vysya Bank
N O T E S

11. 28 October 2014 11
ING Vysya Bank
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Disclosure of Interest Statement ING VYSYA BANK LTD
 Analyst ownership of the stock No
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