27 October 2017
2QFY18 Results Update | Sector: Financials
Canara Bank
Neutral
BSE SENSEX
33,157
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg. Val, INRm
Free float (%)
S&P CNX
10,323
CBK IN
543.0
219.2/3.4
463/250
18/3/13
1064
33.7
CMP: INR404
TP: INR386 (-4%)
Elevated provisions offset PPoP growth; asset quality stress persists
Canara Bank’s (CBK) PPoP growth of 16% YoY (9% beat on opex beat of 4%) was
offset by elevated provisions of INR21.6b (44% miss), leading to a 27% YoY
decline in PAT to INR2.6b.
Reported NIM was flat QoQ at 2.34% (domestic NIM at 2.6% v/s 2.56 in 1Q). NII
grew 3%/14% QoQ/YoY. 1QFY18 NII had INR800-900m of interest reversals.
Other income grew 9% YoY (-8% QoQ as 1Q included gains from stake sale in
CARE).
Loan growth picked up marginally to 9.5% YoY, driven by 21.7% YoY growth in
retail, while deposits growth was relatively muted at 2.5% YoY, leading to the
CD ratio increasing to 72.2% (67.5%/71.7% in 2QFY17/1QFY18).
Gross slippages declined sharply (40% QoQ) to INR33.7b, driven by controlled
slippages in agri/MSME (INR3b/8b). Absolute GNPA increased 4% QoQ to
INR392b, while GNPA/NNPA stood at 10.51%/7.02% (-5bp/-7bp QoQ). Total
stressed book stood at 13.4% of advances (13.8% in 1Q).
Other highlights:
(a) The bank is in discussions to raise total capital of INR63b
(INR35b equity). (b) CET1 ratio/tier 1 ratio/CAR stood at 8.68%/9.5%/12.45%.
Valuation view:
Net stress on the books continues to remain high, and we expect
continued high credit costs to keep returns subdued. Given the weak operating
environment, we would wait and watch developments in asset quality. We roll
forward our valuation date and arrive at an SOTP-based target price of INR386
(0.6x Sept 2019E BV + INR62 for other investments). Maintain
Neutral.
Financials & Valuations (INR b)
Y/E March
2018E 2019E
NII
115.5 132.9
OP
96.2 110.2
NP
9.6
18.1
EPS (INR)
16.1
30.3
EPS Gr. (%)
-14.1
87.9
BV/Sh. (INR)
486
512
RoE (%)
3.4
6.1
RoA (%)
0.2
0.3
P/E (x)
25.0
13.3
P/BV (x)
0.8
0.8
2020E
158.7
134.7
37.1
62.1
104.9
567
11.5
0.5
6.5
0.7
Research Analyst: Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 3982 5540
| Anirvan Sarkar
(Anirvan.Sarkar@MotilalOswal.com); +91 22 3982 5505
Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 3980 4393 |
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Canara Bank
Exhibit 1: Quarterly snapshot
FY16
INR m
Profit and Loss
Net Interest Income
Other Income
Total Income
Operating Expenses
Employee
Others
Operating Profits
Provisions
PBT
Taxes
PAT
Asset Quality
GNPA
NNPA
GNPA (%)
NNPA (%)
PCR (Calculated, %)
PCR (Reported, %)
Slippages
Slippage Ratio (%)
Restructured loans*
% to Loans
Ratios (%)
Fees to Total Income
Cost to Core Income
Tax Rate
CASA (cal)
Loan/Deposit
CAR
Tier I
Margins - cumulative (%)
Yield on loans
Yield On Investments
Cost of Deposits
Margins
Balance sheet (INR b)
Loans
Retail Loans
Deposits
CASA Deposits
1Q
25,165
11,130
36,295
16,259
10,588
5,672
20,036
13,597
6,438
1,650
4,788
1,30,806
88,881
4.0
2.7
32.1
59.0
25,190
3.3
2,30,370
7.1
16.6
52.1
25.6
23.2
68.7
10.8
8.3
10.2
8.0
7.1
2.2
3,241
420
4,719
1,097
2Q
26,465
12,105
38,570
19,129
11,078
8,050
19,441
12,123
7,318
2,029
5,289
1,40,213
93,825
4.3
2.9
33.1
59.8
22,010
2.8
2,28,910
7.1
15.3
59.1
27.7
23.9
66.6
11.0
8.6
10.2
8.0
7.1
2.2
3,231
445
4,852
1,160
3Q
22,266
11,686
33,952
18,427
10,398
8,030
15,524
14,289
1,236
386
850
1,98,134
1,29,401
5.8
3.9
34.7
54.0
54,020
6.9
2,06,080
6.2
19.4
63.9
31.2
24.1
67.7
11.5
8.7
9.9
7.9
7.0
2.2
3,319
484
4,906
1,181
4Q
23,738
13,832
37,570
21,104
12,395
8,709
16,466
63,315
-46,850
-7,795
-39,055
3,16,378
2,08,329
9.4
6.4
34.2
50.1
1,46,020
17.7
1,30,633
4.0
20.2
67.4
16.6
25.7
67.7
11.1
8.8
9.7
7.9
6.9
2.2
3,247
541
4,798
1,235
1Q
23,074
15,847
38,921
20,732
12,082
8,650
18,189
14,929
3,260
970
2,290
3,23,341
2,14,939
9.7
6.7
33.5
50.8
38,780
4.8
1,33,801
4.2
16.7
70.1
29.8
27.6
69.0
12.1
8.8
9.2
7.3
6.5
1.9
3,213
562
4,653
1,283
2Q
24,424
17,818
42,241
20,834
12,169
8,664
21,408
15,857
5,550
1,981
3,569
3,33,154
2,18,871
9.8
6.7
34.3
51.8
24,490
3.0
1,31,470
4.0
19.0
64.2
35.7
27.2
67.5
12.2
8.9
9.3
7.7
6.4
2.0
3,271
545
4,843
1,317
FY17
3Q
24,138
17,917
42,055
22,242
13,057
9,184
19,813
14,846
4,968
1,749
3,219
3,43,387
2,22,958
10.0
6.7
35.1
52.5
22,250
2.7
1,20,001
3.6
16.4
71.7
35.2
30.1
65.0
12.3
9.0
9.0
7.0
6.3
1.8
3,316
550
5,103
1,537
4Q
27,082
23,963
51,045
21,316
11,842
9,473
29,729
27,087
2,642
500
2,142
3,42,020
2,16,490
9.6
6.3
36.7
55.6
31,000
3.8
1,13,650
3.3
19.0
57.9
18.9
30.2
69.1
12.9
9.8
8.6
7.2
6.3
2.0
3,420
589
4,953
1,497
1Q
27,132
21,085
48,218
23,494
13,518
9,976
24,724
22,038
2,686
170
2,516
3,76,578
2,43,006
10.6
7.1
35.5
54.5
55,110
6.9
80,000
2.3
18.8
64.9
6.3
30.7
71.7
12.6
9.6
8.4
7.3
5.8
2.1
3,482
608
4,859
1,491
FY18
2Q
27,834
19,362
47,196
22,397
13,773
8,625
24,798
21,566
3,232
630
2,602
3,91,641
2,51,656
10.5
7.0
35.7
54.8
33,670
2.5
75,000
2.1
20.7
59.6
19.5
31.2
72.2
12.5
9.5
8.2
7.3
5.7
2.1
-16
-5
-13
7
-16
-5
-13
7
Variation (%)
QoQ
YoY
3
-8
-2
-5
2
-14
0
-2
20
271
3
4
4
0
-1
40
0
-39
-64
-6
-132
14
9
12
8
13
0
16
36
-42
-68
-27
18
15
7
5
132
6
37
-18
-43
-173
3,583
3
10
663
9
22
4,964
2
3
1,551
4
18
Source: MOSL, Company
27 October 2017
2

Canara Bank
Exhibit 2: Quarterly performance v/s expectation (INR b)
Y/E March
Net Interest Income
% Change (YoY)
Other Income
Net Income
Operating Expenses
Operating Profit
% Change (YoY)
Other Provisions
Profit before Tax
Tax Provisions
Net Profit
% Change (YoY)
2QFY18A
27,834
14
19,362
47,196
22,397
24,798
16
21,566
3,232
630
2,602
-27
2QFY18E
27,138
11
19,060
46,198
23,437
22,761
6
15,000
7,761
2,406
5,355
50
Var. (%)
3
2
2
-4
9
44
-58
-74
-51
Comments
Opex lower than expected
Opex beat led to PPoP beat
Provisions higher than expected
Provisions miss led to PAT miss
Source: MOSL, Company
Other highlights
Asset quality remains stressed; total stressed loans at 13.4% of advances
GNPA/NNPA declined marginally 5bp/7bp QoQ (10.51%/7.02%).
SDR/S4A/5:25/OSRL stood at 1.8%/0.7%/1.8%/2.1%. PCR stood at 54.75%
(+23bp QoQ). Total stressed loans stood at 13.4% of advances v/s 13.8% in
4QFY17.
Gross slippages of INR33.7b (-40% QoQ) included INR 8b from two power
accounts and the remaining were contributed by: MSME – INR8b, agri - INR5b,
other priority sector loans – INR1.5b, medium enterprises – INR3b, non-priority
– INR3b, and overseas – INR2.95b.
The bank expects a maximum of INR25b slippages in each of 3QFY18 and
4QFY18, effectively guiding to INR138b of slippages in FY18.
Provisioning for RBI’s lists will require additional provisions of INR20b spread
over the next 2 quarters
Loan book growth sluggish, but moving in the right direction
Total loan book growth picked up marginally by 3%/10% QoQ/YoY owing to
slowdown in large corporates book, even as retail loan book grew 21.7% YoY
and SME book rose 11% YoY.
Retail loan book growth was led by vehicle loan growth of 26% YoY. Direct
housing grew 18.8% YoY, MSME grew 10.5%, Agri book grew 8.4%, education
book 12.5% and other personal loans grew 28.9%
CASA deposits growth was strong at 17.7% YoY (+4% YoY). Reported CASA ratio
improved 69bp QoQ to 33.8% v/s 33.1% a quarter ago. Cost of deposits declined
13bp QoQ to 5.7%
Others
Total branch count stood at 6,119 at end-1QFY18 (+22 branches QoQ).
27 October 2017
3

Canara Bank
2QFY18 conference call highlights
Asset quality
The bank has INR49b exposure to 16 accounts on the second list given by the
RBI, 37% PCR on both lists combined. Total provision requirement on the two
lists together is INR85b, of which INR60b has already been provided. The bank
will provide another INR20b towards these accounts over the next two
quarters.
The bank has not yet received the final RBI audit report.
Restructured: INR200b (INR75b std.), SDR: INR65b (moratorium ends mostly in
FY18 but some will continue to 1QFY19), S4A: INR25b, 5:25: (65b), SMA2 –
INR95.9b.
Total infra exposure at INR500b (6.4% NPA), of which power is INR290b (4.48%).
Power sector exposure of INR291b comprises INR13b of SEBs, distribution
(INR100b), and generation (INR150b). Most generation companies are running
at low PLF.
Steel sector total exposure INR150b (INR10b NPA and INR5b rated A and above).
Textile exposure at INR130b (11% NPA).
Majority of their SDR accounts would expire by 4QFY18, a minor portion may
slip over to 1QFY19.
Written-off account recovery was INR3.8b; the bank aims to increase this to
INR5b/quarter; expecting recoveries and upgrades of INR7.5-8b a quarter.
The bank expects a maximum of INR25b slippages in each of 3QFY18 and
4QFY18, effectively guiding to INR138b of slippages in FY18.
INR33.67b of slippages (MSME – INR8b, agri - INR5b, other priority sector loans
– INR1.5b, medium enterprises – INR3b, non-priority – INR3b, overseas –
INR2.95b. INR8b of slippages in the quarter came from power).
Other updates
Propose to open 4 more Candy (Canara digital branches) by Mar ’18.
The bank is in the process of discussions to raise capital of INR63b (INR35b
equity, INR18b Tier I and INR10b Tier II).
27 October 2017
4

Canara Bank
Story in charts
Exhibit 3: Loan growth remained muted YoY (%)
30 32
Loans (INR b)
24 21
11 9 10
7
4
6
(2) (1) 1 (0)
5
8 10
14 16
20
11
9
11 10 12 12 12 9
17
14
YoY gr. (%)
Exhibit 4: CASA grew 17.7% YoY with CASA ratio at 33.8%
CASA Ratio (calc,%)
CASA YoY gr. (%)
30
21
16 18
24 23 25 23 23 23 24 23 24 24 26 28 27 30 30 31 31
Source: Company, MOSL
Source: Company, MOSL
Exhibit 5: Reported global NIM was flat QoQ
Exhibit 6: Credit costs declined this quarter (%)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 7: Absolute GNPA declined marginally QoQ
Gross NPA (%)
Net NPA (%)
Exhibit 8: NNPA + OSRL stood at 9.1% (%)
NNPA (%)
OSRL (%)
Source: Company, MOSL
Source: Company, MOSL
27 October 2017
5

Canara Bank
Exhibit 9: We cut FY18/19 PAT estimates by 46%/36% with increase in provision estimates
INR b
Net Interest Income
Other Income
Total Income
Operating Expenses
Operating Profits
Provisions
PBT
Tax
PAT
Margins (%)
Credit Cost (%)
RoA (%)
RoE (%)
BV
ABV
EPS
Old Est
FY18 FY19
113.0 124.5
73.9
78.3
186.9 202.9
93.5 103.2
93.4
99.7
67.4
59.0
26.0
40.7
8.1
12.6
18.0
28.1
2.02
1.99
1.80
1.40
0.29
0.41
6.2
9.1
498
540
246
302
30
47
FY20
144.1
86.1
230.2
113.9
116.3
62.3
54.0
16.7
37.2
2.02
1.30
0.47
11.0
595
386
62
Revised Est
FY18 FY19 FY20
115.5 132.9 158.7
73.9
78.3
86.1
189.4 211.3 244.9
93.2 101.1 110.2
96.2 110.2 134.7
82.2
83.9
80.9
14.0
26.2
53.8
4.3
8.1
16.7
9.6
18.1
37.1
2.06
2.11
2.22
2.20
2.00
1.70
0.16
0.26
0.48
3.4
6.1
11.5
486
512
567
223
270
336
16
30
62
Change (%)
FY18 FY19 FY20
2.2
6.8
10.2
0.0
0.0
0.0
1.3
4.1
6.4
-0.4
-2.0
-3.3
3.0
10.5 15.8
22.1 42.3 29.8
-46.4 -35.5 -0.3
-46.4 -35.5 -0.3
-46.4 -35.5 -0.3
-2.5
-9.1
-46.4
-5.0
-10.7
-35.5
-4.6
-13.0
-0.3
Source: MOSL, Company
Valuation and view
Maintain Neutral rating
with target price of INR386
Over the last six years, CBK’s profitability has declined significantly, led by
compression in core revenues and higher provisioning costs. Net stress addition
has increased over the last several quarters. Improvement in the economic
environment remains the key.
The RBI has allowed various tools apart from normal restructuring (5:25, SDR,
S4A, sale to ARC-leading to security receipts etc.) to tackle the stress loans.
Hence, actual overall stress loans have been significantly higher than reported
NNPAs.
Difference between reported BV and ABV (NNPA at 70%) is high at ~48%. Until
the improvement in economic growth and resolution of key sectors problems
(infra and iron & steel) come through, the markets would focus on adjusted
P/BV.
We maintain Neutral with an SOTP-based TP of INR380.
We have cut PAT
estimates by ~46.4%/35.5% for FY18/FY19 to account for higher than expected
provisions on account of continued balance sheet stress. Despite attractive
valuations, given the challenging operating environment, we would wait and
watch developments on asset quality. Our key assumptions are a) risk-free rate
of 6.9%, b) risk premium of 5%, c) beta of 1.6x, d) average growth of ~15% over
FY16-36E, and e) terminal growth rate of 5%. In view of prolonged stress
additions and provision pressure, we maintain our Neutral rating on the stock
with an SOTP based TP of INR386 (bank valued at 0.6x of Sept 2019E BV).
Subsidiaries add INR62 (16%) to our SOTP.
27 October 2017
6

Canara Bank
Exhibit 10: Our SOTP is INR386
Stake
Banking Business (A)
Total Value of Key ventures
Canfin Homes
Canara HSBC
Canara Robecco
Less: Holdco discount
Value of Key Ventures (B)
SOTP (A+B)
CMP
Upside
Total Value
Value per share
324
78
37
38
3
16
62
386
404
-4
% of
Total
84
20
10
10
1
4
16
100
Rationale
0.6x Sept 2019 BV; Based on RI
Latest MCAP
Based on peer valuation
Valued at 4% of AUM
31
51
51
65,932
40,000
Source: MOSL, Company
Exhibit 11: Expect return ratios to stay under pressure (%)
Y/E MARCH
Net Interest Income
Fee income
Fee to core Income (%)
Core Income
Operating Expenses
Cost to Core Income
Employee cost
Other operating expenses
Core operating Profits
Trading and others
Operating Profits
Provisions
NPA provisions
Other Provisions
PBT
Tax
Tax Rate
RoA
Leverage (x)
RoE
FY12
2.17
0.51
19.0
2.67
1.32
49.2
0.84
0.48
1.36
0.32
1.67
0.52
0.36
0.16
1.15
0.23
19.6
0.92
18.5
17.1
FY13
2.00
0.44
17.8
2.44
1.31
53.6
0.83
0.48
1.13
0.37
1.50
0.56
0.47
0.09
0.93
0.20
21.8
0.73
18.2
13.3
FY14
1.98
0.48
19.6
2.46
1.34
54.7
0.81
0.53
1.11
0.39
1.50
0.83
0.47
0.35
0.68
0.14
20.4
0.54
19.4
10.5
FY15
1.86
0.43
18.8
2.29
1.40
61.0
0.82
0.57
0.89
0.44
1.34
0.66
0.73
-0.06
0.67
0.15
22.7
0.52
20.7
10.8
FY16
1.77
0.47
21.1
2.25
1.36
60.6
0.81
0.55
0.89
0.41
1.30
1.88
1.75
0.13
-0.58
-0.07
11.7
-0.51
21.1
-10.8
FY17
1.74
0.55
24.0
2.28
1.50
65.6
0.86
0.63
0.79
0.78
1.57
1.28
1.31
-0.03
0.29
0.09
31.7
0.20
21.0
4.2
FY18E
1.88
0.59
24.0
2.47
1.52
61.3
0.85
0.67
0.95
0.61
1.56
1.34
1.29
0.05
0.23
0.07
31.0
0.16
21.5
3.4
FY19E
1.94
0.61
23.9
2.56
1.48
57.9
0.81
0.67
1.08
0.53
1.61
1.23
1.18
0.05
0.38
0.12
31.0
0.26
22.9
6.1
FY20E
2.07
0.63
23.3
2.69
1.43
53.3
0.77
0.66
1.26
0.49
1.75
1.05
1.01
0.05
0.70
0.22
31.0
0.48
23.8
11.5
27 October 2017
7

Canara Bank
Financials and Valuations
Income Statement
Y/E March
Net Interest Income
Change (%)
Non Interest Income
Net Income
Change (%)
Operating Expenses
Pre Provision Profits
Change (%)
Provisions (excl tax)
PBT
Tax
Tax Rate (%)
PAT
Change (%)
Pref. Dividend (Incl tax)
Profits for Equity SH
Change (%)
Equity Dividend (Incl tax)
Core PPP*
Change (%)
*Core PPP is (NII+Fee income-Opex)
Balance Sheet
Y/E March
Equity Share Capital
Reserves & Surplus
Net Worth
Deposits
Change (%)
of which CASA Dep
Change (%)
Borrowings
Other Liabilities & Prov.
Total Liabilities
Current Assets
Investments
Change (%)
Loans
Change (%)
Fixed Assets
Other Assets
Total Assets
Asset Quality
GNPA (INR M)
NNPA (INR M)
GNPA Ratio
NNPA Ratio
Slippage Ratio
Credit Cost
PCR (Excl Tech. write off)
PCR (Incl Tech. Write off)
E: MOSL Estimates
2013
78,790
2.5
31,530
1,10,320
3.9
51,420
58,900
-0.9
22,179
36,721
8,000
21.8
28,721
-12.5
-
28,721
-12.5
6,740
44,488
-7.6
2014
89,442
13.5
39,328
1,28,770
16.7
60,810
67,960
15.4
37,330
30,630
6,250
20.4
24,380
-15.1
-
24,380
-15.1
5,936
50,376
13.2
2015
96,637
8.0
45,503
1,42,139
10.4
72,636
69,504
2.3
34,527
34,976
7,950
22.7
27,026
10.9
-
27,026
10.9
6,517
46,392
-7.9
2016
97,634
1.0
48,752
1,46,386
3.0
74,919
71,467
2.8
1,03,324
-31,858
-3,730
11.7
-28,128
-204.1
-
-28,128
-204.1
0
48,797
5.2
2017
98,718
1.1
75,544
1,74,262
19.0
85,123
89,140
24.7
72,720
16,420
5,200
31.7
11,220
-139.9
-
11,220
-139.9
719
44,715
-8.4
2018E
1,15,490
17.0
73,885
1,89,375
8.7
93,171
96,204
7.9
82,235
13,969
4,330
31.0
9,638
-14.1
-
9,638
-14.1
1,123
58,702
31.3
(INR Million)
2019E
2020E
1,32,948 1,58,738
15.1
19.4
78,342
86,118
2,11,290 2,44,856
11.6
15.9
1,01,126 1,10,190
1,10,164 1,34,666
14.5
22.2
83,919
80,894
26,244
53,772
8,136
16,669
31.0
31.0
18,109
37,103
87.9
104.9
-
-
18,109
37,103
87.9
104.9
2,110
4,322
73,662
96,665
25.5
31.2
2013
4,430
2,44,348
2,48,778
35,58,560
8.8
8,60,613
8.1
2,02,834
1,13,255
41,23,426
3,47,147
12,11,328
18.7
24,21,766
4.2
28,627
1,14,557
41,23,426
2014
4,613
2,91,589
2,96,201
42,07,228
18.2
10,32,794
20.0
2,72,306
1,43,483
49,19,219
4,48,287
12,68,283
4.7
30,10,675
24.3
66,416
1,25,558
49,19,219
2015
4,752
3,13,840
3,18,592
47,38,401
12.6
11,35,322
9.9
2,56,716
1,66,297
54,80,006
4,86,411
14,20,614
12.0
33,00,355
9.6
69,494
2,03,131
54,80,006
2016
5,430
3,10,602
3,16,032
47,97,916
1.3
12,35,422
8.8
2,68,733
1,46,927
55,29,608
5,67,337
14,23,093
0.2
32,47,148
-1.6
71,981
2,20,049
55,29,608
2017
5,973
3,30,883
3,36,855
49,52,760
3.2
14,97,490
21.2
3,95,036
1,50,551
58,35,202
5,88,255
15,02,659
5.6
34,20,088
5.3
71,683
2,52,510
58,35,194
2018E
5,973
3,38,683
3,44,656
55,22,327
11.5
17,22,114
15.0
4,27,551
1,65,673
64,60,207
5,87,683
17,28,058
15.0
37,96,297
11.0
70,408
2,77,761
64,60,207
(INR Million)
2019E
2020E
5,973
5,973
3,53,967 3,86,032
3,59,940 3,92,005
62,12,618 70,38,897
12.5
13.3
19,80,431 22,77,495
15.0
15.0
4,64,372 5,06,086
1,82,550 2,01,247
72,19,479 81,38,235
5,86,709 6,22,888
19,87,266 22,85,356
15.0
15.0
42,70,834 48,26,043
12.5
13.0
69,132
67,857
3,05,537 3,36,091
72,19,479 81,38,235
(%)
4,23,789
2,12,225
8.41
4.40
2.70
1.70
49.9
67.2
62,602
52,780
2.58
2.18
2.50
0.78
15.7
61.4
75,702
59,654
2.50
1.98
3.49
0.79
21.2
60.1
1,30,399
87,862
3.90
2.66
3.61
1.20
32.6
57.3
3,16,380
2,08,928
9.43
6.43
7.49
2.93
34.0
50.1
3,42,020
2,17,831
9.65
6.37
3.59
2.23
36.3
55.6
3,94,621
2,41,052
9.99
6.35
4.20
2.20
38.9
57.6
4,07,359
2,23,119
9.14
5.22
2.90
2.00
45.2
63.2
27 October 2017
8

Canara Bank
Financials and Valuations
Ratios
Y/E March
Spreads Analysis (%)
Avg. Yield-Earning Assets
Avg. Yield on loans
Avg. Yield on Investments
Avg. Cost-Int. Bear. Liab.
Avg. Cost of Deposits
Interest Spread
Net Interest Margin
Profitability Ratios (%)
RoE
RoA
Int. Expense/Int.Income
Fee Income/Net Income
Non Int. Inc./Net Income
Efficiency Ratios (%)
Cost/Income*
Empl. Cost/Op. Exps.
Busi. per Empl. (INR m)
NP per Empl. (INR lac)
* ex treasury
Asset-Liability Profile (%)
Loans/Deposit Ratio
CASA Ratio
Investment/Deposit Ratio
G-Sec/Investment Ratio
CAR
Tier 1
Valuation
Book Value (INR)
Change (%)
Price-BV (x)
Adjusted BV (INR)
Price-ABV (x)
EPS (INR)
Change (%)
Price-Earnings (x)
Dividend Per Share (INR)
Dividend Yield (%)
E: MOSL Estimates
2013
9.4
10.3
8.2
7.3
7.4
2.1
2.2
2014
9.5
10.5
8.3
7.4
7.4
2.1
2.1
2015
9.2
10.2
7.9
7.2
7.2
2.0
2.0
2016
8.8
9.6
8.0
6.8
6.8
2.0
1.9
2017
8.0
8.9
7.3
6.1
6.1
2.0
1.9
2018E
7.9
8.8
6.8
5.8
5.8
2.1
2.1
2019E
7.6
8.4
6.8
5.5
5.5
2.1
2.1
2020E
7.7
8.5
6.8
5.5
5.5
2.2
2.2
13.3
0.73
76.9
16.3
28.6
10.5
0.54
77.4
13.3
30.5
10.8
0.52
77.9
15.3
32.0
-10.8
-0.51
77.8
15.3
33.3
4.2
0.20
76.1
15.0
43.4
3.4
0.2
73.8
16.4
39.0
6.1
0.3
72.3
17.2
37.1
11.5
0.5
71.1
17.1
35.2
49.7
63.3
135.6
6.7
49.8
60.4
136.1
5.0
55.6
58.8
141.3
5.0
54.9
59.3
144.7
-5.1
58.9
57.7
142.2
1.9
55.6
56.0
144.9
1.6
52.7
55.0
153.8
2.8
48.9
53.7
165.1
5.5
68.1
24.2
34.0
84.2
12.4
9.8
71.6
24.5
30.1
84.8
10.6
7.7
69.7
24.0
30.0
88.4
10.2
7.6
67.7
25.7
29.7
89.2
11.1
8.8
69.1
30.2
30.3
90.3
11.8
9.4
68.7
31.2
31.3
79.9
10.2
8.2
68.7
31.9
32.0
78.2
9.5
7.7
539.9
512.5
5.5
0.8
269.6
1.5
30.3
87.9
13.3
3.0
0.8
68.6
32.4
32.5
77.0
9.1
7.4
513.4
10.7
0.8
436.0
0.9
64.8
-12.5
6.2
13.0
3.2
518.1
0.9
0.8
434.1
0.9
52.9
-18.5
7.6
11.0
2.7
552.5
6.6
0.7
432.4
0.9
56.9
7.6
7.1
10.5
2.6
477.2
-13.6
0.8
227.1
1.8
-51.8
-191.1
-7.8
0.0
0.0
471.4
-1.2
0.9
234.4
1.7
18.8
-136.3
21.5
1.0
0.3
485.7
3.0
0.8
223.3
1.8
16.1
-14.1
25.0
1.6
0.4
567.3
10.7
0.7
336.4
1.2
62.1
104.9
6.5
6.2
1.5
27 October 2017
9

Canara Bank
Corporate profile
Set up in 1906, Canara Bank (CBK) it one of the oldest
banks in the India. The government nationalized the
bank in 1969. Over the years bank has made several
acquisitions, major one being Lakshmi Commercial
Bank which gave significant presence in northern
India. As of September 2016, the bank had a network
of 5,868 branches and 10,026 ATMs spread across
India. The bank also has several overseas branches
and subsidiaries / joint ventures (Can Fin Homes
Limited, Canara Robeco AMC, Canara HSBC Oriental
Life Insurance Company amongst others).
Exhibit 2: Shareholding pattern (%)
Sep-17
Promoter
DII
FII
Others
66.3
21.4
6.0
6.3
Jun-17
66.3
21.3
5.9
6.5
Sep-16
66.3
20.2
6.4
7.1
Source: Capitaline
Source: Capitaline
Company description
Exhibit 1: Sensex rebased
Source: MOSL/Bloomberg
Exhibit 3: Top holders
Holder Name
LIC OF INDIA
HDFC TRUSTEE COMPANY LIMITED
RELIANCE CAPITAL TRUSTEE CO LTD
% Holding
13.6
4.6
1.5
Note: FII Includes depository receipts
Exhibit 4: Top management
Name
Thothala Narayanasamy
Manoharan
Rakesh Sharma
Dina Bandhu Mohapatra
Harideesh Kumar B
Pradyuman Singh Rawat
B Nagesh Babu
Designation
Chairman (Non-Executive)
Managing Director & CEO
Executive Director
Executive Director
Executive Director
Company Secretary
Exhibit 5: Directors
Name
G V Manimaran
Sairam Mocherla
Rajinder Kumar Goel
Uma Shankar
Name
Sanjay Jain
Sunil Hukumchand Kocheta
Pankaj Jain
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
J L Sengupta & Co
J Singh & Associates
Ram Raj & Co
S C Vasudeva & Co
V K Niranjan & Co
Type
Statutory
Statutory
Statutory
Statutory
Statutory
Source: Capitaline
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY18
FY19
FY20
MOSL
forecast
16.1
30.3
62.1
Consensus
forecast
25.3
39.9
45.5
Variation
(%)
-36.3
-24.1
36.5
Source: Bloomberg
27 October 2017
10

Canara Bank
NOTES
27 October 2017
11

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Canara Bank
Disclosure of Interest Statement
Analyst ownership of the stock
Canara Bank
No
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Contact No.:022-30801085.
Registration details of group entities.: MOSL: NSE (Cash): INB231041238; NSE (F&O): INF231041238; NSE (CD): INE231041238; BSE (Cash): INB011041257; BSE(F&O): INF011041257; BSE(CD); MSE(Cash): INB261041231;
MSE(F&O): INF261041231; MSE(CD): INE261041231; CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser: INA000007100. Motilal Oswal Asset
Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) offers wealth
management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers Commodities
Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products
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