Canara Bank share price target

Outlook and valuation: The loan book will see some momentum as the bank aims to improveitsCDratio(currentlyat67%).ThismayaidNIM,butgiventhecutinbaserate,we expectNIMtoremainunderpressure.Stressinthecorporatebookcontinuesanditscourse...

Canara Bank reported sequential growth in PAT led by healthy growth in operating income along with decline in provisioning expenses. Operating income grew by 6.3% qoq and 13.8% yoy led by the higher treasury and net interest income. Provisioning expenses declined 10.8% qoq led by 25.5% qoq decline in NPA provision. The bank provided Rs9.8bn for NPA provision in 2Q v/s Rs13.1bn in 1QFY16 due to moderation in fresh slippages. Total slippages stood at Rs22bn (slippage ratio of 2.7%) v/s Rs25.2bn (slippage ratio of 3.1%) in 1QFY16, primarily due to lower slippages from Agri & mid corporate segment. Sequential improvement...

Canara Bank's Q1FY16 profit (Rs 4.8bn, 41% yoy) was below our expectation of Rs 5.4bn dueto(1)higherNPAprovisionsasslippages(Rs25bn)continuedtoremainelevated,and (2)anincreaseintheprovisioncoverageratioby170bps.Operatingprofitgrew12%yoyto...

Despite better asset quality performance in 3Q and a rather positive guidance for 4Q, CBK has underperformed in sync with most other PSBs. Our interaction with the management indicated that CBK is on track to deliver steady asset quality performance for 4Q as opposed to the general market expectation of weak numbers for the sector.