MOSL: CANARA BANK (Neutral)-Gross slippages jump QoQ-elevated provisions led to PAT miss
​Canara Bank: Gross slippages jump QoQ; elevated provisions led to PAT miss
(CBK IN, Mkt Cap USD3.2b, CMP INR396, TP INR380, 4% Downside, Neutral)
- Canara Bank’s (CBK) earnings (INR2.1b; -105% YoY) missed our estimate by ~53% due to elevated provisions of INR27.1b (27% miss). Loan growth for FY17 stood at 5% YoY, with infra loans (15% of advances) declining 8% YoY, but retail loans growing 7% YoY.
- Reported NIM expanded 8bp QoQ to 2.27% (domestic NIM at 2.39%, global NIM at 2.23%). However, 3QFY17 NII had interest reversal of INR2b for SDR/S4A accounts, adjusting for which calculated NIM expanded 3bp QoQ. 4QFY17 NII also had an interest on IT refund component of INR1.25b.
- Gross slippages of INR31b (+25% QoQ) had INR9b contribution from the standard restructured book. Absolute GNPA was flat QoQ at INR342b, while GNPA/NNPA stood at 9.63%/6.33% (-34bp/-39bp QoQ). Write-offs were high during the quarter at INR24.7b. Total stressed book stood at 12% of loans.
- Other highlights: (a) Non-interest income grew 34% QoQ, aided by a gain of INR7.04b on Canfin Homes stake sale and INR850m of PSLC sales income. (b) As of 4QFY17, the bank held additional provisions of INR5b for NPAs over and above RBI norms. c) Tier 1 ratio/CAR stood at 8.92%/12.86%. During the quarter, the bank raised INR11.24B via rights issue.
Canara is engaged in offering banking products and services throughout India. with "one stop banking". Co. provides insurance premium financing, commercial real estate financing arrangements, loan servicing, consumer finance loans, credit card lending and automobile financing. Other services include savings; deposits; health and life insurance; wealth advisory services; asset management and capital markets services. As of Mar 31 2013, Co. has 3,723 branches and 3,526 ATM's catering to more than 4.7 crore customers. At Mar 31 2013, Co. had total assets of INR4,123,426,086,000 and total deposits of INR3,558,559,913,000.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.