Corporation Bank - Asset quality remains weak - Emkay

Reco: HOLD
CMP: Rs 292
Target Price: Rs 400

- CRPBK's Q1FY14 headline numbers are in line with estimates with NII/PAT at Rs9.6bn/Rs3.8bn. A fivefold rise in trading gains compensates for higher provisioning

- Stressed asset addition higher at 1.2% of advances (Rs8.7bn slippages + Rs5bn restructuring). NPL/net worth ratio rose by 436bps to 19%. PCR declines to 56.8% from 62%

- With a meager 19% CASA mix and 2.3% NIMs, the recent tightening measurers could take a further toll on the bank's already subdued NIMs

- Valuations at 0.5x FY15 ABV reasonable given <1% RoAs and low core tier I of ~7.1%. Dividend yield at ~8% provides some respite. Maintain HOLD.

Source : Equity Bulls

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