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.
Corporation Bank – In a transformation phase - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jun 26, 2000

    Corporation Bank – In a transformation phase

    The Corporation Bank, India’s premier public sector bank is affecting a sea change in its technology adoption to stay ahead of other public sector banks. The move is aimed at bridging the technological gap with new private sector banks.

    In a move to become technologically competent, the bank has entered into a strategic business alliance with Netsavvy Solutions Pvt. Ltd., to provide Internet banking facilities to its customers. The bank has already web - enabled its cash management products to facilitate easy access of information by corporate clients and is now offering services such as NRI deposits, anywhere-anytime banking online. In the next phase, the bank plans to offer a range of services such as web shopping, electronic payment with the aim of offering B2C services.

    The bank has also opted to implement treasury management solution from Laser Soft Infosystems Ltd., which is a banking software solution provider. This software would enable online interaction of domestic and foreign treasury operations and investments with more than 500 functionalities. It will cover operations such as foreign exchange transactions, money market operations and investments. The package will be the first of its kind in India and will have facilities for bullion operations, cross-border remittances and asset-liability of the user bank.

    Corporation bank has a well-established communication network on a VSAT backbone. The bank also plans to offer phone-banking facilities in major metropolitan cities within a month.

    This initiative of the bank suggests that it is transforming itself with the changing scenario. Although the bank has automated around 80% of its business, they are nowhere in league with the new private banks. Still they are appreciable considering the government holding of 68.3%. This is also one of the reasons for its comparatively lower valuations.

    Comparative performance
    Particulars Corporation Bank Centurion Bank SBI HDFC Bank
    Interest income (Rs bn) 16.0 4.4 214.5 6.8
    Growth 19.0% 12.0% 12.0% 80.8%
    Net profit (Rs bn) 2.3 0.3 14.7 1.2
    Growth 21.0% 60.0% 46.0% 45.6%
    Operating profit margins 29.0% 18.0% 28.0% 44.9%
    Net profit margins 15.0% 8.0% 7.0% 17.7%
    CAR 13.0% 9.0% 13.0% 12.2%
    NPAs 2.0% 3.0% 7.0% 0.8%
    Market Price (Rs) 81.8 16.2 235.5 255.0
    Price/Book value (x) 0.9 1.0 1.2 8.3
    Market Cap/Gross income (x) 0.6 0.6 0.6 9.1

    In the immediate future, the bank is likely to face greater competition in one of its premier offerings - the cash management product, which contributed more than 30% to its total profits. Its leadership position in this market is under threat from new players such as ICICI Bank and HDFC Bank. A couple of other public sector banks have also entered the fray. To minimize its risk, the bank plans to diversify its revenue stream by foraying into primary dealership, depository services and tapping domestic gold deposits. The bank has also expressed its desire to enter into the insurance sector. The Government's stated intention in the Budget to bring down its stake to 33 % in all public sector banks, may act as a trigger for interest in the stock. The bank's infrastructure, its lean workforce, large branch network, and its good asset quality is likely to interest private sector banks for acquisition purpose.



    Equitymaster requests your view! Post a comment on "Corporation Bank – In a transformation phase ". 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.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    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 16, 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