Scripscan:United Bank of India
cmp:70
Code:533171
Story:United Bank of India (UBOI) was established in 1950. It is a state owned financial services company providing banking services. United Bank of India was formed after merger of four banks namely - Comilla Banking Corporation, Bengal Central Bank, Comilla Union Bank and Hooghly Bank. Later in 1961, Cuttack Bank and Tezpur Industrial Bank were merged into United Bank of India. In 1969, the bank was nationalized along with 13 other commercial banks. In 1973, it acquired Hindustan Mercantile Bank and in 1976, it acquired Narang Bank of India. Its products include - finance and insurance, consumer banking, corporate banking, investment banking, investment management, private equity, mortgages and credit cards.Net interest income increased by 19.3% to Rs 667.7 crore for the quarter ended December 2011 and by 16.7% to Rs 1, 860.1 crore for 9MFY12. Fee based/ other income improved 12% to to Rs 163.2 crore in Q3FY'12 and Rs 495.1 crore in 9MFY12, recording growth of 18.5%.Strong branch expansion and relatively healthy non-interest income UBOI enjoys the advantage of a modern, 100% CBS branch network that is growing organically at healthy rate. The bank has also opened 15 branches across the country on March 21, 2012. Out of these 12 branches are under Financial Inclusion Plan in the unbanked villages of West Bengal, Tripura and Assam where the bank has opened 9 branches, 2 branches and 1 branch respectively. Besides, 3 other branches are opened at Imphal, Karur & Bangalore. With this, the bank has a total network of 1678 branches spread across the country. The board has okayed its plan to open another 80 branches next fiscal. UBOI has received RBI's nod for opening representative office at Yangoon, Myanmar. The office is expected to be opened during the first quarter of the next financial year. While the present branches are predominantly metro and urban-concentrated 43%, semi-urban 19% and balance 38% rural, the bank intends to increase its presence in semi-urban areas going forward. This will help UBOI to mobilize more deposits and thereby improve CASA further. With strong corporate relationships and increasing branch presence, improving NIM, strong CASA ratio and business coupled with progressive return ratios UBOI is well poised to capitalize on strong growth opportunities in the Indian banking space.UBOI is all set to post an EPS of Rs 18.5 in FY12. At the current market price of Rs 70, the share is traded at a forward P/E of 3.8 on FY12 earnings and P/ABV of 0.8 (FY12). We recommend BUY with a target of Rs 90 in the medium term and at which, the stock will trade at a P/E of 4.9.
Source:Sunidhi sec
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