*Canara Bank’s weak 1QFY12 results lead us to lower our estimates of its FY12 and FY13 profits, by 10.9% and 7.6%, respectively. *
*High slippages, one-off provisions dent profits. *Slippage fell 25.5% qoq, to Rs13.7bn (2.8% of loans); of this, ~Rs6.6bn was due to the shift to system-based NPA recognition. Also, the bank made additional NPA provisions (Rs285m). Around 7% of loans have yet to be shifted to system-based NPA recognition. Management, therefore, expects high slippage in 2QFY12 as well, though better recoveries could sustain asset quality from further impairment. *NIM declines, but likely to improve. *NIM fell 70bps qoq to 2.42%, led by a 292-bp qoq drop in CASA share to 25.4%, and by an interest-income reversal of Rs2.1bn due to system-based NPA recognition. This led to weak net interest-income growth (3.8% yoy). Ahead, NIM is unlikely to slip, led by Canara’s low credit-to-deposits (71.6%) and a possible fall in wholesale deposit rates. We estimate NIM in FY12 and FY13 at 2.5% and 2.6%, respectively. *Fee income modest, recoveries robust. *While fee income rose 18.5% yoy, trading losses of Rs770m cut into profitability. Cash recoveries were robust, almost doubling yoy to Rs7.5bn. *Safe Harbor Statement:* *Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.* ** *Nothing in this article is, or should be construed as, investment advice.** * ** * * ** ** -- For Anything related with Stock market be Online at http://www.niftyviews.com/ Get free updates on your mobile phone. Sms "Join TSR " and send to 09223492234 FOR TRIAL STOCK/NIFTY/OPTION CALLS You received this message because you are subscribed to Google Group "STOCKRESEARCHER" group. To post to this group, send an email to [email protected] To unsubscribe email [email protected] for more info visit http://groups.google.com/group/STOCKRESEARCHER?hl=en-GB . This is Not a Spam Mail. Disclaimer :- "The opinions expressed by the members on this board are based on their individual experience and perceptions and to share information with other members with the best of intentions to help fellow members in investment decisions as equity investment is a risky venture."
