Canara Bank Limited Research Report

Canara Bank Limited Research Report

 

Industry

Market Price

Recommendation

Target

Time Horizon

Bank

309.45

Buy

350

1-Year

 

Canara Bank Limited - Q2FY2023 Review

Canara Bank Limited reported net revenue of ₹20,482.35 crores for the quarter ended September 30, 2022, compared to ₹17,336.33 crores for September 30, 2021. Profit After Tax was ₹2,593.49 crores for the quarter ended September 30, 2022, compared to ₹1,100.59 crores during the corresponding quarter of the previous year, respectively.

 

Canara Bank Limited - Investment Summary

CMP (₹)

309.45

52 Week H/L

171.75/315

Market Cap (crores)

56,138

Face Value (₹)

10.00

Promoter Holding (%)

62.93

Non-Promoter Holding (%)

36.07

Total (%)

100.00

Book Value

₹338.76

EPS TTM

₹35.04

 

Canara Bank Limited - Overview

  • Canara Bank is a Bengaluru-based PSB that was founded in 1906. The merger of Syndicate Bank and Canara Bank took effect on April 1st, 2020, in accordance with a decree from the Ministry of Finance, GOI.

  • The bank has 9,722 branches and 12,158 ATMs/recyclers as of September 30, 2022.

  • The fourth-largest PSB as of September 30, 2022 is Canara Bank.

Canara Bank Limited Overview

 

Beta: 1.55

Alpha: -8.83

Risk Reward Ratio: 1.26

Margin of Safety: 14%

 

Canara Bank Limited - Quarterly Summary

Quarterly (INR in crores)

Sep-22

Jun-22

Mar-22

Dec-21

Sep-21

Interest Income

20,482.35

18,536.89

18,226.88

17,982.50

17,336.33

Interest Expended

12,681.08

11,395.61

10,855.84

10,761.37

10,791.47

 

 

 

 

 

 

Net Interest Income

7,801.27

7,141.28

7,371.04

7,221.13

6,544.86

 

 

 

 

 

 

Other Income

6,876.02

5,202.38

6,291.54

4,861.01

6,539.67

Total Income

14,677.29

12,343.66

13,662.58

12,082.14

13,084.53

 

 

 

 

 

 

Employee Cost

3,259.40

3,545.56

3,362.24

3,102.60

3,266.24

Other Expenses

4,429.27

2,148.13

3,734.45

3,037.57

4,438.65

Provision and Contingencies

3,637.73

3,688.78

3,727.34

2,246.08

3,360.73

EBT Before Exceptional Items

3,350.89

2,961.19

2,838.55

3,695.89

2,018.91

 

 

 

 

 

 

Exceptional Items

-

-

-

1,354.90

-

EBT

3,350.89

2,961.19

2,838.55

2,340.99

2,018.91

 

 

 

 

 

 

Tax Expenses

757.40

902.88

869.51

710.31

918.32

PAT before Minority Interest & Share in Profit/(Loss) of Associates

2,593.49

2,058.31

1,969.04

1,630.68

1,100.59

 

 

 

 

 

 

Minority Interest

-24.03

-13.35

-142.39

-55.03

119.98

Share in Profit/(Loss) of Associates

136.09

134.81

92.15

81.44

93.84

Net Profit

2,705.55

2,179.77

1,918.80

1,657.09

1,314.41

 

Business

  • On July 1st, 1906, Canara Bank was established under the name Canara Hindu Permanent Fund Ltd. Ammembal Subba Rao Pai established the bank.

  • The bank's name was changed from Canara Hindu Permanent Fund Ltd to Canara Bank Ltd in the year 1910.

  • Along with 14 other significant banks nationwide, the Bank was nationalized on July 19, 1969.

  • Laksmi Commercial Bank Ltd. merged with the Bank in the year 1984.

  • The Bank entered into memorandums of understanding (MoUs) with worldwide majors HSBC (Asia Pacific) Holding and Robeco Groep N.V. to commission two joint ventures in the insurance and asset management sectors, respectively.

  • As of December 31, 2018, the bank held the top spot among all PSBs in the Digital Score Card published by the Ministry of Electronics and Information Technology (MeitY).

  • GOI is the majority shareholder holding a 62.93% stake in the bank followed by LIC of India holding 8.83% as on September 30, 2022.

  • The business segment of Canara Bank Limited is as follows:

    • Corporate/ Wholesale Banking

    • Retail Banking

    • Treasury

    • Life Insurance Operations

    • Other Banking Operations

  • Out of the total revenue, 30% has been generated from Corporate/Wholesale banking, 37% from Retail Banking, 23% from Treasury, 10% from Life Insurance Operations, and 0% from Other Banking Operations in FY 2022 compared to 30%, 36%, 24%, 9%, and 0% in FY 2021, respectively.

    Canara Bank Limited Revenue Breakup

  • Out of the total revenue, the contribution from domestic operations was 99% and 1% from international operations in FY 2022 compared to 99% and 1% in FY 2021, respectively.

    Canara Bank Limited Geographical Revenue Breakup

 

Canara Bank Limited - SWOT ANALYSIS

  • Strength

    • Fourth Largest Public Sector Bank

    • Major Ownership by the Government of India

    • Established Branch Network

    • Improving Profitability.

  • Weakness

    • Poor Customer Service.

    • Weak Customer Base.

    • Moderate Asset Quality.

  • Opportunity

    • Investment in digital technology.

    • Improving asset qualities of PSU Banks.

    • Increasing capital expenditure by the companies.

  • Threat

    • Increasing competition in the financial sector.

    • Concentric Geographical Networking

    • Ongoing uneven circumstances globally (e.g., Inflation).

 

Canara Bank Limited - Revenue Trend

Canara Bank Limited Top Line & Bottom Line Revenue Trend

Canara Bank Limited Shareholding Pattern

 

Canara Bank Limited - Ratio Analysis

 

Mar-19

Mar-20

Mar-21

Mar-22

Net Interest Income

2.19%

1.88%

2.12%

2.19%

Gross NPA

8.83%

8.21%

8.93%

7.51%

Net NPA

5.37%

4.23%

3.82%

2.65%

Provision Coverage Ratio

63.18%

75.86%

79.68%

84.17%

Capital Adequacy Ratio

13.42%

13.30%

13.18%

14.90%

CASA Ratio

29.17%

31.36%

32.72%

33.92%

ROA

0.08%

(0.26%)

0.24%

0.48%

ROE

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