Visit http://indiaer.blogspot.com/ for complete details CRBK.BO, Corporation Bank (Rs735.40) /F2Q1: Steady Trends; Valuations Still
Attractive
Corporation Bank reported a profit of Rs3.5 bn (+5% QoQ and +21% YoY). NII grew by 3%
QoQ and 42% YoY. Margins were stable sequentially at 2.64%. Loans and deposits grew 8% and
6% QoQ respectively – however, the growth seems to have been back-ended in nature. Loan
loss provisions decreased to 0.5% of loans (annualized) from 0.8% in the previous quarter as
new NPL formation was offset by recoveries/upgrades.
Other highlights: Cost to core income moved up to 41% from 39% in the previous quarter,
driven by higher employee expenses (headcount addition + gratuity provision); Core non-interest
income progression was weak, falling 5% YoY; and Net capital gains to PBT was negative at
Rs-45 mn (-1% of PBT) (vs. +Rs59 mn in F1Q11 and +Rs665 mn in F2Q10).
Remain Overweight: Corporation Bank trades at 6.1x our F2012E earnings and 1.3x BV. We
believe valuations are still attractive, given robust pre-provision profits progression and improved
profitability versus historical levels. Our higher price target reflects better asset quality outlook.
No comments:
Post a Comment