Canara Bank - Huge restructuring pipeline to impact profitability - Emkay

- CBK'S Q4FY12 NII at Rs20.4bn - inline with est. However, muted non-int inc and higher employee and provision cost dragged net profit. PAT at Rs8.3bn was lower than est.

- Q4FY12 Slipp. at Rs11.2bn (1.4% ann.) and restructuring at Rs27bn (1.2%). Despite higher NPA prov, PCR remains low at 16%. Rec/Upg at 60% of op NPL remains the only +ve.

- NIM at 2.2%(calc) dragged by a) lower CASA mix (24%) b) lower share of high yielding assets (25% of loans) and c) excess reliance on bulk deposits (42% of deposits).

- Downgrade to REDUCE on concerns over a) NNPL / networth at 15%, b) slipp in restructured book at 30% and c) huge restructuring pipeline in Q1FY13 calling for higher provisions.

Source : Equity Bulls

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