X

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: Deserves a look - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Nov 2, 2000

    Corporation Bank: Deserves a look

    Corporation Bank's operating margins in the 2QFY01 improved sharply to 35.3% due to reshuffling of high cost deposits. As a result the bank's operating profits jumped by 46% to Rs 1.5 bn. During the quarter saving bank deposits accounted for 28% of total deposits and the bank has also reduced the cost of deposits to 8% (from 8.5% as on March 2000). Investment portfolio of the bank has been classified according to RBI guidelines. As a consequence the bank has saved Rs 15 m (net of tax) on account of provision for depreciation in the value of investments.

    (Rs m) 2QFY00 2QFY01 Change
    Operating Income 3,909 4,335 10.9%
    Other Income 697 687 -1.4%
    Interest Expenses 2,859 2,804 -1.9%
    Operating Profit (EBDIT) 1,050 1,531 45.8%
    Operating Profit Margin (%) 26.9% 35.3%  
    Other expenses 741 869 17.4%
    Depreciation 48 48 1.3%
    Profit before Tax 959 1,301 35.6%
    Other provisions 158 248 56.7%
    Tax 224 343 52.8%
    Profit after Tax/(Loss) 577 710 23.1%
    Net profit margin (%) 14.8% 16.4%  
    Diluted number of shares 120.0 120.0  
    Diluted Earnings per share* 19.2 23.7  
    P/E (at current price) 3 3  
    *(annualised)      

    The bank's advances during the 1HFY01 increased by 21% and deposits grew by 9%. It has also achieved higher credit to deposit ratio of 54% compared to 49% in 1HFY00. The bank expects to achieve the growth of 19% in deposits and 22% in advances for the year ended March 2001.

    Corporation Bank has reduced its NPA ratio to 1.8% (from 1.9% in FY00). Also it has the healthy capital adequacy ratio (CAR) of 13.3%. Adequate CAR will allow the bank to foray in insurance without any equity dilution. It has planned to invest around Rs 500 m in insurance venture. However, the exact game plan is not yet finalised.

    In order to reduce the operating expenses the bank is continuously investing in technology improvement. Out of 650 branches it has already computerised 311 branches, covering around 78% of its total business. It is planning to computerise 50 more branches by March 2001 and will invest around Rs 650 m for the purpose. Although, the bank has large network of branches it has only 5 ATMs. It has planned to install 50 ATMs by the year end, which will cost the bank around Rs 40 m.

    Key Ratios
    (Rs m) FY00 1HFY01
    Avg. business / employee 18.5 20.2
    Avg. business / branch 302.1 334.5
    Profit / employee 0.2 0.2
    Interest spread 3.0% 3.4%
    CAR 12.8% 13.3%

    Yet another achievement of the bank is maintaining its income from cash management services despite competition. During the 1HFY01 income from CMS improved by 12.5% to Rs 348 m. It has added 49 new clients taking the total clienteles to over 900 companies.

    At the current market price of Rs 67 Corporation Bank is trading at a P/E multiple of 3 times its 2QFY01 annualised earnings on Price/Book value ratio of 0.6 times. The bank's valuations are lower than other private sector and public sector banks. Its initiatives in improving the technology and maintaining the current growth rate is expected to re-rate its valuations in time to come.

     

     

    Equitymaster requests your view! Post a comment on "Corporation Bank: Deserves a look". 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...

    More
    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

    CORPORATION BANK SHARE PRICE


    Aug 18, 2017 (Close)

    TRACK CORPORATION BANK

    • 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

    MORE ON CORPORATION BANK

    CORPORATION BANK - ORIENTAL BANK COMPARISON

    Compare Company With Charts

    COMPARE CORPORATION BANK WITH

    MARKET STATS