So far we have seen City Union Bank first half results as the weakest in the private sector banks. The total income for the first half grew by only 7% and the net profit by 14% compare to first half last year.

The cost of funds jumped up by 5% which many will debate saying they are not feeling any pressure compare to other banks to source the fund but we think City Union Bank cost of funds is already costly compare to its peers.

The deposits have gone up by 11% and the loan book has grown up by 12% and the balance sheet has grown by 11%. Looking at the results and the NPA figures we think that they haven’t provisioned enough for the bad debts and this is the reason we think net profits look great.

Coming to the valuations, we think CUB is trading at premium price to its 2016 and 2017 valuations and is fairly priced for its 2018 valuations.

Aziz Dodhiya is the chief investment officer for the Valueoperations fund.