HSBC Underweight on ING Vysya Bank

New equity likely to sustain recovery in loan growth. Capital adequacy ratio to improve to a comfortable level; has been the lowest among peers since 2005.

Consequent to the increase in capital adequacy, the loan growth will improve to 19.6% at the end of March 2008 as compared to the forecast of 18.0% we had assumed earlier for the same period. However, loan growth to continue to stay below the industry average of c23%.

Increase net profit forecasts by 4.1%, 10.3 % and 8.7% to INR1.1bn, INR1.5bn and INR 2.0 for FY08e, FY09e and FY10e respectively. Target price raised for Vysa from INR231 to INR249 per share. Potential downside of 6.2% from CMP of Rs 265, with an underweight rating for the stock.