Canara Bank Slippages may have peaked out :Emkay

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Canara Bank

Slippages may have peaked out

HOLD

CMP: Rs496                                        Target Price: Rs535

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n     CBK results below expectations with NII at Rs17.9bn and net profit at Rs7.3bn. Slippages at Rs13.6bn, though remain high were lower than Rs19bn in previous quarter

n     NII lower driven by interest income reversal of Rs2bn. Adjusted for the same NII growth was at 15.4% (in line). NIMs down by 40bps as expected

n     One positive in the results – one of very few banks to have system classified NPAs upto as low as Rs2 lakh loan. We do not expect any –ve surprises on NPAs going forward

n     Lowering earnings by 10.2%/4% for FY12E/FY13E for higher provisions (one-time). Large infra book and low NIMs remain key -ves. Maintain HOLD with TP of Rs535 (1.1x FY13E ABV)