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Corporation Bank reported PAT of Rs 4022.2mn, up 5.2%YoY which was
above our/steet estimates. NII for the quarter was lower than estimated,
grew by 2.3%YoY mainly on account of higher interest expended. However
other income grew robustly by 67.0%YoY to Rs 4416.5mn due to which PAT
came above our estimates. With major PSU banks reporting higher NPAs,
CRPBKs GNPA remained stable at 1.35%, NNPA at 1.0%. NIMs improved
by 22bps to 2.4% sequentially.
The stock is currently trading at 0.7x of its FY13E ABV. We value the
standalone business at 0.9x of its FY13E ABV at Rs 600.5 and maintain our
Buy rating on the stock revising Target Price downwards to Rs 540
considering restructuring accounts to increase in coming quarters.
Key Highlights
Strong growth in advances: CRPBK witnessed robust growth in advances up by
28.4% YoY and 13.2% QoQ to Rs 923.8bn while Deposits also grew by 28.5%
YoY in which CASA share continues to remain low at 21.1% while NIMs of
the bank improved sequentially by 22bps to 2.4%.
Strong growth in other income supported by fee income and trading gains: Other
income of the bank increased significantly by 67% YoY to Rs 4417mn as
compared to our estimate of Rs 3835mn. The huge increase was largely on
account of strong growth in fee income, trading gains and recovery.
Asset quality remained stable; restructuring in comfort zone: On the asset quality
front, Gross NPA of the bank remained stable at 1.4% to Rs 12bn while
NNPA at 1.0%. Slippages for the quarter stood at Rs 3740mn which includes
one large account of King fisher Airlines of Rs 1.55bn for which it has made
provision of Rs 0.4bn. In addition, bank has restructured loans worth Rs
7.4bn which includes GTL exposure of Rs 3.1bn. Moreover, Bank is expected
to restructure Rajasthan State power Distribution Company worth Rs 13bn in
the coming quarter. The total outstanding restructured amount stood at
Rs45.4bn (4.9% of advances).
Provisions higher due to GTL exposure: The provisions and contingencies
increased to Rs. 3014.9mn as compared to 2048mn in Q2 FY12 mainly due to
increase in higher provisioning of NPAs at Rs 1769mn while 504mn on
investment depreciation. Also, bank has taken hit of Rs 490mn by providing
NPV loss on GTL.
Valuations and Outlook
CRPBK has delivered healthy growth in its profits driven by robust growth
in other income coupled with improvement in margins. Asset quality
remained stable but still uncertainty continues going forward with
restructuring amount likely to increase. The stock is currently trading at 0.7x
of its FY13E ABV. We value the standalone business at 0.9x of its FY13E
ABV at Rs 600.5 and maintain our Buy rating on the stock revising Target
Price downwards to Rs 540 (vs earlier of Rs 601) considering restructuring
accounts to increase in coming quarters.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Corporation Bank reported PAT of Rs 4022.2mn, up 5.2%YoY which was
above our/steet estimates. NII for the quarter was lower than estimated,
grew by 2.3%YoY mainly on account of higher interest expended. However
other income grew robustly by 67.0%YoY to Rs 4416.5mn due to which PAT
came above our estimates. With major PSU banks reporting higher NPAs,
CRPBKs GNPA remained stable at 1.35%, NNPA at 1.0%. NIMs improved
by 22bps to 2.4% sequentially.
The stock is currently trading at 0.7x of its FY13E ABV. We value the
standalone business at 0.9x of its FY13E ABV at Rs 600.5 and maintain our
Buy rating on the stock revising Target Price downwards to Rs 540
considering restructuring accounts to increase in coming quarters.
Key Highlights
Strong growth in advances: CRPBK witnessed robust growth in advances up by
28.4% YoY and 13.2% QoQ to Rs 923.8bn while Deposits also grew by 28.5%
YoY in which CASA share continues to remain low at 21.1% while NIMs of
the bank improved sequentially by 22bps to 2.4%.
Strong growth in other income supported by fee income and trading gains: Other
income of the bank increased significantly by 67% YoY to Rs 4417mn as
compared to our estimate of Rs 3835mn. The huge increase was largely on
account of strong growth in fee income, trading gains and recovery.
Asset quality remained stable; restructuring in comfort zone: On the asset quality
front, Gross NPA of the bank remained stable at 1.4% to Rs 12bn while
NNPA at 1.0%. Slippages for the quarter stood at Rs 3740mn which includes
one large account of King fisher Airlines of Rs 1.55bn for which it has made
provision of Rs 0.4bn. In addition, bank has restructured loans worth Rs
7.4bn which includes GTL exposure of Rs 3.1bn. Moreover, Bank is expected
to restructure Rajasthan State power Distribution Company worth Rs 13bn in
the coming quarter. The total outstanding restructured amount stood at
Rs45.4bn (4.9% of advances).
Provisions higher due to GTL exposure: The provisions and contingencies
increased to Rs. 3014.9mn as compared to 2048mn in Q2 FY12 mainly due to
increase in higher provisioning of NPAs at Rs 1769mn while 504mn on
investment depreciation. Also, bank has taken hit of Rs 490mn by providing
NPV loss on GTL.
Valuations and Outlook
CRPBK has delivered healthy growth in its profits driven by robust growth
in other income coupled with improvement in margins. Asset quality
remained stable but still uncertainty continues going forward with
restructuring amount likely to increase. The stock is currently trading at 0.7x
of its FY13E ABV. We value the standalone business at 0.9x of its FY13E
ABV at Rs 600.5 and maintain our Buy rating on the stock revising Target
Price downwards to Rs 540 (vs earlier of Rs 601) considering restructuring
accounts to increase in coming quarters.
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