MOSL: CANARA BANK (Neutral)-Slippages remain elevated-One off gains help PPoP
​Canara Bank: Slippages remain elevated; One off gains help PPoP
(CBK IN, Mkt Cap USD2.2b, CMP INR371, TP INR360, 4% Downside, Neutral)
- Canara Bank's (CBK) PBT declined 18% YoY to INR2.7b, missing our estimate by ~68% due to elevated provisions of INR22.0b (94% higher than our estimate). Loan growth stood muted at 8% YoY due to 11% YoY decline in infra loans (13% of advances), despite retail/SME loans growing 8%/12% YoY.
- Reported NIM expanded 11bps QoQ to 2.34% (domestic NIM at 2.56%). NII grew 0%/18% QoQ/YoY. Adjusting for INR1.25b of interest on IT refund in 4QFY17, NII grew 5% QoQ. 1QFY18 NII had INR800-900m of interest reversals.
- Gross slippages of INR55b (+78% QoQ) had INR7.92b contribution from demonetization moratorium and ~INR27.2b from 3-4 bulky corporate accounts. Absolute GNPA increased 10% QoQ to INR377b, while GNPA/NNPA stood at 10.56%/7.09% (+93bp/+76bp QoQ). Total stressed book stood at 14% of advances.
- Other highlights: (a) Non-interest income grew 33% YoY, aided by gain on CARE stake sale and INR1.3b of PSLC sales income. (b) CET1 ratio/tier 1 ratio/CAR stood at 8.72%/9.57%/12.61%.
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.
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