Views on Corporation Bank 3QFY2014 results - Angel Broking

Views of Mr. Vaibhav Agrawal (VP- Research - Banking, Angel Broking) on Corporation Bank 3QFY2014 results:

"For 3QFY2014, Corporation Bank reported stable asset quality numbers, while operating performance was weak. Gross and Net NPA levels for the bank remained flat sequentially, as annualized slippage ratio for 9MFY2014 came in at 2.7% lower than 3.4% reported in 1HFY2014 and PCR for the bank increased sequentially by 200bp to 53.6%. On the operating front, NII growth was moderate at 13.4% lower compared to advance growth of 18% yoy dragged by 17bp yoy lower margins at 2.2%. Non-interest income (excl. treasury) grew at muted 2% yoy, dragged by lower recoveries from written-off accounts. Opex grew by 16.7% yoy, much higher than 5.5% yoy growth in operating income, thereby leading to a 2% yoy decline in pre-provisioning operating profit. Provisions more than doubled on a yoy basis to Rs. 826cr (of which 'other provisions' came in at Rs. 332cr much higher than Rs. 55cr in 3QFY2013; we await management clarity on 'other provisions' made during the quarter), leading to a PBT level loss for the bank at Rs. 83cr vs. a gain of Rs. 353cr reported in 3QFY2013. However, tax writeback of Rs. 209cr as compared to tax expenses of Rs. 50cr aided the bank to report positive earnings of Rs. 127cr, which was lower by 58% yoy. Given the current macroeconomic backdrop, we await clarity from the management regarding their outlook on the asset quality going ahead. We maintain our Neutral rating on the stock."

Corporation Bank 3QFY2014 Result Update (CMP: Rs. 251, Target Price: NA, Recommendation: Neutral)

Source : Equity Bulls

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