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CORPORATION BANK: Key takeaways
Concern on credit growth to emerge in FY2012 given the recent increase in interest rates.
RBI has raised concern on banks borrowing short term (overnight, 1 month and 3 months)
to fund balance sheet growth. Asset duration has increased in recent years given the
focus on infrastructure lending.
Margins to remain under pressure in FY2012 though no near-term concern as pricing
power remains strong. Investment in RIDF to continue as meeting agriculture targets
continues to remain difficult.
Strong focus on recoveries given the slippages witnessed in 2Q and 3Q. Select slippages
are due for recoveries in 4Q which could result in gross NPL declining from current levels.
Most of the infrastructure projects are under implementation and risks remain in few of
them though they are unlikely to slip in FY2012.
The bank would need to make provision of Rs5.4 bn for pension liability. The bank has
not ascertained the liability specifically for retired employees which would need to be
provided by 4QFY11.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
CORPORATION BANK: Key takeaways
Concern on credit growth to emerge in FY2012 given the recent increase in interest rates.
RBI has raised concern on banks borrowing short term (overnight, 1 month and 3 months)
to fund balance sheet growth. Asset duration has increased in recent years given the
focus on infrastructure lending.
Margins to remain under pressure in FY2012 though no near-term concern as pricing
power remains strong. Investment in RIDF to continue as meeting agriculture targets
continues to remain difficult.
Strong focus on recoveries given the slippages witnessed in 2Q and 3Q. Select slippages
are due for recoveries in 4Q which could result in gross NPL declining from current levels.
Most of the infrastructure projects are under implementation and risks remain in few of
them though they are unlikely to slip in FY2012.
The bank would need to make provision of Rs5.4 bn for pension liability. The bank has
not ascertained the liability specifically for retired employees which would need to be
provided by 4QFY11.
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