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: Internal focus - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 28, 2003

    Corporation Bank: Internal focus

    Corporation Bank, has reported a strong growth in its bottomline despite a lackluster growth in its topline. While bottomline has risen by 29% topline has grown by a marginal 3.5% in 1QYF04 on a YoY basis. Bottomline growth has been buoyed mainly by strong improvement in net interest income as well as a significant fall in provisioning. operating margins have also shown an improvement in the June quarter.

    (Rs m) 1QFY03 1QFY04 Change
    Income from Operations 5,192 5,374 3.5%
    Other Income 1,194 1,257 5.2%
    Interest Expenses 3,554 3,342 -6.0%
    Net interest income 1,638 2,032 24.1%
    Other Expenses 982 1,262 28.5%
    Operating Profit 656 770 17.4%
    Operating Profit Margin (%) 12.6% 14.3%  
    Provisions and Contingencies 516 269 -47.9%
    Profit before Tax 1,334 1,758 31.8%
    Tax 352 494 40.3%
    Profit after Tax/(Loss) 982 1,264 28.7%
    Net Profit Margin (%) 18.9% 23.5%  
    No. of Shares (m) 143.4 143.4  
    Diluted Earnings per share* (Rs) 27.4 35.3  
    P/E Ratio (x)   5.0  

    The bank has indicated a 26% YoY growth in its retail advances (overall advances growth of 10% in the same period). However, interest income on advances has still shown a 8% dip in the June quarter. This is seemingly due to pressure on both the yields as well as lending in the corporate segment. We believe that the bank is facing pressure as far as growing business in the corporate lending sphere is concerned. Yields also seem to be falling at a faster rate now thus further putting pressure on the topline. The bank seems to have increased its exposure to government securities as indicated by the strong rise in interest income from the same in 1QFY04. Pressure in the corporate business front may have forced the bank to deploy capital in G-Secs.

    Corporation Bank has witnessed a significant improvement in the net interest income and this is mainly due to a falling interest expenses. Net Interest Margins (NIM) have also improved to 3.2% (3.0% in 1QFY03). However, NIM has fallen from the levels seen in FY03 (3.6%), thus indicating pressure on this front. While other expenses have shown a significant increase in the June quarter, operating margins have still shown an improvement. The bank has witnessed a significant growth in its employee expenses.

    While other income has grown marginally, the growth in income from treasury operations has been strong at 49% in the June quarter. However this has been the only redeeming factor as the bank is facing pressure on its fee-based income which has seen a decline of 2% in 1QFY04. Corporation Bank has also significantly reduced its provisioning in 1QFY04. This has also to an extent helped in the strong growth of the bottomline. While provisioning has reduced, the bank continues to enjoy a portfolio of assets that have good quality. Net NPAs stood at 1.6% (1.7% in FY03) in the June quarter.

    The stock is currently trading at Rs 180, at price to book ratio of 1.2x. The bank had significantly raised its provisioning for NPAs in FY03. Corporation Bank has one of the lowest level of NPAs among public sector banks. One must also keep in mind the fact that the bank is able to reduce its net NPA levels further, going forward provisioning requirements will be lower and this will further help improve bottomline. Corporation Bank has also been helped considerably by growth in other income as far as its bottomline growth is concerned. Other income growth seems to have been mainly on account of profit booking in the bank's G-Sec portfolio. However, since this is not sustainable in the long run we feel that profit growth from here on is likely to be relatively subdued.



    Equitymaster requests your view! Post a comment on "Corporation Bank: Internal focus". 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

    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.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    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.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    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 21, 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



    Detailed Quarterly Results With Charts