Corporation Bank - 1QFY2014 Result Review - Angel Broking

Corporation Bank reported healthy operating performance (NII grew by 19.3% yoy), however dragged by weak asset quality performance, bottom-line grew marginally 2.1 % yoy. Non-interest income grew strongly by 77.4% yoy, probably boosted by treasury gains. Overall, pre-provisioning profit for the bank grew by 48.5% yoy. On the asset quality front, the bank witnessed significant asset quality deterioration during the quarter, as Gross and Net NPA levels increased sequentially by around 35%. PCR for the bank came off by 527bp qoq to 56.8%.

We await further clarity from the management regarding the asset quality performance during the quarter and outlook on the same going ahead. Given the recent macroeconomic developments and overall weak environment, we believe that the asset quality pressures are unlikely to subside as quickly as was anticipated earlier. At the CMP, the stock is trading at 0.4x FY2015E ABV. We recommend Accumulate rating on the stock.

Source : Equity Bulls

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