Canara Bank - Addition to stressed assets remain steep - Emkay

- Canara bank Q1FY13 results below expectation with NII at Rs18.4bn and PAT at Rs7.8bn. MTM gains on AFS portfolio provided some respite against modest performance

- 1) falling share of high yielding SME and Retail loans 2) 106bps decline in CASA 3) higher bulk deposit at ~40% led to further contraction in NIM's by 10bps qoq to 2.4%

- Stressed assets addition remains steep - slippages at Rs15.0bn and new restr at Rs60.1bn (SEB Rs55bn). We build steep credit costs (80bps) with high slippages and low PCR

- Low margins, high credit cost, very high AFS portfolio with higher duration makes us extremely wary of quality of earnings. Maintain REDUCE with TP of Rs380.

Source : Equity Bulls

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