Canara Bank - Core performance continues to remain fragile - Emkay

Reco: REDUCE
CMP: Rs 412
Target Price: Rs 380

- Canara Bank Q4FY13 NII/PAT at Rs20.9/7.3bn - below est. NII growth remained modest at 2.5% as NIMs remained modest at 2.1% and loan growth slowed to 4% yoy

- NII growth for past eight-quarters has averaged mere 0.7% yoy. NIMs have remained modest at 2.4% for eight quarters now. Core operating profit grew weak at 3% yoy

- Stress asset addition at Rs32.5bn (5.4% of loans), highest ever. Modest recovery / upgrades (50% of FY12 NPA), PCR at 61% and impairment ratio at 21% add to woes

- Margin pressures and elevated provisioning (due to low PCR) will suppress RoA's at 0.7% levels over FY13-15E. Retain REDUCE with target price of Rs380

Source : Equity Bulls

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