India's City Union Bank hits near 3-yr high after Macquarie initiates coverage

City Union Bank

07/04/2021 09:39

** Shares of the private-sector lender  CTBK.NS  rise as
much as 7.1% to 166.50 rupees, their highest since July 2018
    ** Macquarie initiates coverage on the bank with
"outperform" rating and target price of 245 rupees
    ** Brokerage says CTBK is a well-run mid-sized
private-sector bank with superior profitability
    ** Says CTBK stands out for its conservative approach and
high-yielding small-to-medium enterprise (SME) target segment
    ** Adds 99% of CTBK's loan book is secured, and historical
loss given default has been just 30% due to high collateral
values
    ** Says it expects CTBK earnings to rise at a compound
annual growth rate of ~30%, driven by sharply falling credit
costs and improving loan growth/margins
    ** We are far more comfortable with the quality of CTBK's
loan book and expect credit costs to normalise faster -
Macquarie
    ** About 4.6 mln shares changed hands, 1.2x 30-day avg
    ** Co shares down 13.7% this year, as of last close, vs 23%
fall in 2020

 (Reporting by Nallur Sethuraman in Bengaluru)
 ((Sethuraman.NR@thomsonreuters.com; (Within U.S.
1-646-223-8780, Outside U.S. +91 8067496031); Reuters Messaging:
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