Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Corp. Bank: Analyst meet notes - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • May 23, 2002

    Corp. Bank: Analyst meet notes

    Corporation Bank reported healthy business growth in FY02 with 27% rise in advances and 15% increase in deposits. However, the bank’s interest income inched up marginally by 8% with sharp decline in yield on advances (a drop of 110 basis points to 11.3%) and increasing sub PLR lending. The bank’s net interest margins declined to 3.2% as proportionate reduction in cost of deposits by 50 basis points to 7.6% was less than fall in yield on advances.

    During the year, the bank focused aggressively into the retail finance market (specially housing finance) to diversify its loan portfolio. Retail assets of the bank accounted for 14% of total advances (from 8% in FY01) recording a growth 138%. The bank aims to expand its operations substantially in housing finance in FY03 with target to add a portfolio of Rs 5 bn.

    Industrial downtrend impacted the bank’s asset quality, which is reflected from increase in net NPA ratio to 2.3% in FY02 (2% in FY01). During the year, the bank’s gross NPAs increased by 21% to Rs 5.9 bn. Engineering, chemical and food processing industries accounted for major portion of bad loans. Consequently, provisions for doubtful debts increased by over 40% in FY02 and coverage ratio stood at 57%. The bank will have to monitor its advances in order to maintain its asset quality.

    The bank’s fee based income, which contributed 16% to total income, witnessed a marginal growth of 10% excluding gains from sale of investments. Due to favourable interest rate environment, Corp. Bank doubled its profits from sale on investment portfolio (contributing 35% to other income). The bank’s commission and exchange revenues are facing stiff pressure from private banks with a 9% decline witnessed in FY02. The bank is betting on its tie up with LIC and New India Assurance to generate higher transaction business. However, there is no clarity from the management on the amount of business that these tie-ups may generate.

    On the technology integration front, the bank has installed 125-networked ATMs across the country and aims to increase this number to 250 by the end of current fiscal. It has computerized 439 branches, covering 88% of its total business. The bank has targeted to spend Rs 880 m in FY03 on IT, which could be for computerization, online banking, setting up ATMs and branch expansion.

    At the current market price of Rs 125, Corp. Bank trades at a P/E multiple of 6x and adjusted price to book value ratio of 1x. The bank’s CAR at 17.9% is relatively on the higher side and will allow it to expand its business operations. However, with increasing competition from private banks and low demand for credit, it will be a challenging task for the bank to increase its loan growth while maintaining profit margins. We have projected a CAGR of 20% in the bank’s profits over the next three years, assuming that the bank is able to leverage on its tie up with the two insurance companies and revival in the economic activity.

    Detailed FYO2 results



    Equitymaster requests your view! Post a comment on "Corp. Bank: Analyst meet notes". Click here!


    More Views on News

    IDFC Bank: Strong Trading Income Shields Credit Slowdown (Quarterly Results Update - Detailed)

    Aug 10, 2017

    IDFC Bank is taking steps to address contracting NIMs and successfully transition in to a retail bank.

    ICICI Bank: Loan Slippages Trending Downwards (Quarterly Results Update - Detailed)

    Aug 10, 2017

    Asset quality will be the key thing to watch out for going forward.

    Axis Bank: Outside Watchlist Slippages a Big Worry (Quarterly Results Update - Detailed)

    Jul 31, 2017

    Almost 74% of the watchlist as provided by the bank of Rs 226 billion in FY16 has turned into non-performing assets.

    HDFC Bank: Asset Quality Deteriorates due to Farm Loan Waiver (Quarterly Results Update - Detailed)

    Jul 25, 2017

    Asset quality was under pressure on account of farm loan waivers. Despite the higher provisioning, the company reported a healthy profit growth of 20%.

    SBI: Merger Pushes up Bad Loans (Quarterly Results Update - Detailed)

    May 23, 2017

    State Bank of India (SBI) ended FY17 on a healthy note but concerns on bad loans from associate banks remain.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)


    • Track your investment in CORPORATION BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks



    Compare Company With Charts