Visit http://indiaer.blogspot.com/ for complete details CNBK.BO, Canara Bank (Rs657.00) /F2Q11 – Margins Surprise to the Upside
Canara Bank reported F2Q11 profit of Rs10bn: The result was ahead of our estimate of
Rs6.4bn and down 1% QoQ and up 11% YoY. The earnings surprise was driven by net interest
income and lower-than-expected credit costs.
Key trends from the results included: NII growth was strong at 16% QoQ and 52% YoY; Loan
growth was muted at 1% QoQ and 20% YoY, and deposits grew 4% QoQ and 22% YoY; Net
capital gains and recoveries contribution to PBT continued to come off at 9% in F2Q11 vs. 20% in
F1Q11 and 30% in F4Q10; Fee income growth was weak, growing 6% QoQ and 12% YoY; and
Credit costs increased but remained relatively low at 0.5% of loans.
Given the sharp nature of the rise in margins and the fact that the increase in loans yields was
contrary to the trends seen in other banks so far, we will look for further clarity on margin
sustainability at Canara Bank’s analyst meeting .
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