Views on Canara Bank 3QFY2014 results - Angel Broking

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

"Canara Bank reported moderate operating numbers, while asset quality exhibited weakness. On the operating front, NII growth was moderate at 12% yoy (significantly lower compared to advance growth of 32% yoy), while non-interest income was flat on a yoy basis. Operating profit grew was subdued at 5% yoy. The bank witnessed asset quality weakness during the quarter, as it witnessed stressed asset addition of around Rs. 5500cr during the quarter. Annualized slippages rate for the quarter came in at 3.5% as compared to 2.5% qoq, while fresh restructuring came in at around Rs. 3400cr (of which around Rs. 2400cr was discoms restructuring under FRP). Recoveries and upgrades were higher during the quarter at Rs. 1061cr compared to Rs. 891cr in 2QFY2014. Provisioning expenses for the bank grew 68% yoy to Rs. 1052cr, leading to a sharp earnings de-growth of 42% yoy. Going forward, the management has guided for restructuring pipeline of Rs. 3300cr. Given the backdrop of prevailing macro environment, its high exposure to stressed sectors remains a cause of worry. Hence, we maintain our Neutral rating on the stock."

Source : Equity Bulls

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