Canara Bank Disappointing results REDUCE ::Emkay

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Canara Bank

Disappointing results

REDUCE

CMP: Rs 559                                        Target Price: Rs 560

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n     CBK’s NII at Rs19.7bn and net profit at Rs9bn were below expectations driven by drop in NIMs. The NIMs dipped by 10bps qoq to 2.8%

n     Highest ever recoveries of Rs3.3bn, dividends of Rs1.7bn and some write backs helped the bank to offset Rs5.5bn of pension provisions for retired employees

n     The slippages were extreme negative surprise at Rs18.4bn (higher than M9 – Rs16.7bn). With lower  provisions the PCR slipped by 3% to 73%

n     We believe that current valuations at 1.3x FY12E/1.1x FY13E ABV are not attractive looking at the high slippages and requirement of higher provisions