July 27, 2016 / 17:34 IST
Axis Direct's research report on Canara Bank
Canara Bank (CBK) reported better than expected Q1 with a PAT of Rs 2.3 bn (down 52% YoY; our est. Rs 2.1 bn). The key positive during the quarter was visibly strong traction in upgrades/recovery supporting the headline asset quality (GNPLs up by 31 bps QoQ to 9.7%). Moreover, slippages too moderated significantly to Rs 38.8 bn (4.8% of loans). Management is optimistic and does not expect any lumpy slippages along with focus on secured retail businesses for growth.
Loan book growth of ~10-12% YoY with focus on retail loans, NIM of ~2.3% and a credit deposit ratio of ~73%. On the asset quality front, management believes recovery/upgrades to surpass the slippages and guided for a GNPA ratio of ~8% (currently 9.7%).
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