Canara bank reported a healthy 11% YoY rise in net profit led by a robust growth in the core income. Net interest income grew 52% YoY
(which is one of the highest growth rate ever achieved by the bank in recent past). Margin and asset quality improvement to bring higher earnings
growth; we raise FY11 and FY12 estimates by 20% and 23%
High mix of core deposits and pick-up in loan growth will support margins. For FY11, we now expect NIMs to expand by 35bps vs. our earlier
expectation of 16bps. As asset quality is unlikely to throw up any negative surprises.
Gross and Net NPA ratios were largely stable on a sequential basis and stood at 1.49% and 1.06% respectively.
Canara Bank is expected to report an EPS between Rs 86 and Rs 98 for FY 11 with target price for the stock varying between 700 to 800.
