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Corporation Bank
For 3QFY2011, Corporation Bank registered net profit growth of 25.4% yoy to `382cr,
above our estimates of `324cr mainly on account of higher-than-expected other interest
income and lower tax rate of 21.5% (26.1% in 2QFY2011). Advances grew moderately by
3.1% qoq and 26.9% yoy and deposits grew by 1.7% qoq and by 16.7% yoy. Reported NIMs
increased marginally by 7bp to 2.71% in 3QFY2011, leading to strong 40.5% yoy growth in
NII, above our estimates, though this was partly due to high other interest income. Fresh
slippages amounted to `286cr with annualised slippage ratio being 1.8%, though
management attributed this to technical NPAs likely to be upgraded in 4QFY2011. The
provision coverage including technical write-offs declined to 72.8% from 78.5% in
2QFY2011. The cost-to-income ratio stood at 33.4% compared to 39.1% in 2QFY2011.
Gross and net NPA ratios of the bank stood at 1.3% (1.1% in 2QFY2011) and 0.6% (0.4% in
2QFY2011), respectively. The bank’s CAR continued to be healthy at 14.2% with tier-I at
8.1%. At the CMP, the stock is trading at 1.1x FY2012E ABV. We recommend Accumulate on
the stock with a Target Price of `654.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Corporation Bank
For 3QFY2011, Corporation Bank registered net profit growth of 25.4% yoy to `382cr,
above our estimates of `324cr mainly on account of higher-than-expected other interest
income and lower tax rate of 21.5% (26.1% in 2QFY2011). Advances grew moderately by
3.1% qoq and 26.9% yoy and deposits grew by 1.7% qoq and by 16.7% yoy. Reported NIMs
increased marginally by 7bp to 2.71% in 3QFY2011, leading to strong 40.5% yoy growth in
NII, above our estimates, though this was partly due to high other interest income. Fresh
slippages amounted to `286cr with annualised slippage ratio being 1.8%, though
management attributed this to technical NPAs likely to be upgraded in 4QFY2011. The
provision coverage including technical write-offs declined to 72.8% from 78.5% in
2QFY2011. The cost-to-income ratio stood at 33.4% compared to 39.1% in 2QFY2011.
Gross and net NPA ratios of the bank stood at 1.3% (1.1% in 2QFY2011) and 0.6% (0.4% in
2QFY2011), respectively. The bank’s CAR continued to be healthy at 14.2% with tier-I at
8.1%. At the CMP, the stock is trading at 1.1x FY2012E ABV. We recommend Accumulate on
the stock with a Target Price of `654.
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