Corporation Bank - Margin pressure persist; HOLD - Emkay

Corp Bank Q2FY13 NII at Rs8.0bn (+8% yoy) slightly below expectation. However with lower than expected opex and tax provisioning, net profit at Rs4.1bn (+1% yoy) ahead of est

- Q2 NIM at 2.2% contracted 6bps qoq on back of 20bps qoq rise in cost of deposits to 8.3%. Bulk deposits albeit declined qoq remains at 25% levels

-Recovery / up-grades at mere 12% of opening NPA. Limited addition to stressed assets (0.7% of loans in Q2 vs 1.8% in Q1FY13) and incremental LLP at 88% a comfort factor

- Lowered our earnings est by 6% / 15% for FY13 / FY14E each. Lower tier-I CAR will warrant equity infusion. Val at 0.8x / 0.7x FY13/14E ABV with 5%+ dividend yield provides some respite.

Source : Equity Bulls

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