Canara Bank sees sharp recovery from opening lows post Q4 loss of Rs 4,859 cr; CLSA cuts target by 18%

Canara Bank | Bank reported higher profit at Rs 444.1 crore in Q2FY21 against Rs 364.9 crore, net interest income jumped to Rs 6,296 crore from Rs 3,129 crore YoY.

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Shares of Canara Bank fell over 4 percent in morning trade as investors turned wary of the stock post its Q4 show.

The stock touched an intraday high of Rs 243.45 and an intraday low of Rs 236.15.

The bank on Friday reported a net loss of Rs 4,859.77 crore for the fourth quarter ending March 2018 due to three-fold rise in provisions towards bad loans.

Bad loans surged on account of the Reserve Bank of India’s circular on revised guidelines, divergences in classification of non-performing assets (NPAs) and some pain in the agriculture loans.

The government bank received a tax expense write-back of Rs 2,450.62 crore, without which the loss would have been steeper.

This is the second biggest quarterly loss reported by a public sector bank since the bad loan clean-up exercise started in 2015. Previously, Punjab National Bank had reported a loss of Rs 5367 Crore in March quarter ending 2016.

Global research firm CLSA has maintained its sell call on the stock with a target cut to Rs 230 from Rs 280, implying a downside of 18 percent.

It aid said that stressed loans drove the bank’s NPLs during the quarter. Further, it has cut earnings on the back of higher credit costs.

Meanwhile, slippages, it said, rose due to downgrade of non-NPL stressed loans.

On its provisioning, it observed that the upfront provisioning for NCLT and mark to market losses on government securities is conservative. Going forward, profitability levels will normalize from FY20, it added in its report.

The stock has fallen around 10 percent in the past one month, while its three-day loss stood at 2 percent. At 09:18 hrs Canara Bank was quoting at Rs 253.20, up Rs 6.85, or 2.78 percent, on the BSE. It touched an intraday high of Rs 256.35 and an intraday low of Rs 236.15.