CANARA BANK 2022-23 Annual Report Analysis

Sat, 3 Jun

CANARA BANK has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

CANARA BANK Income Statement Analysis

• Interest income during the year rose 21.6% on a year-on-year (YoY) basis.
• Interest expenses were up by 23.1% YoY during the same period.
• Operating expenses increased by 8.3% YoY during the year.
• The bank's net interest income (NII) increased by 19.3% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 2.8% in FY23 as against 2.7% in FY22.
• Other income increased by 7.1% YoY during the year.
• Net profit for the year increased by 83.8% YoY.
• Net profit margins during the year increased to 13.1% in FY23 from 8.7% in FY22.

CANARA BANK Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	706,138	858,847	21.6%
Other Income	Rs m	236,431	253,250	7.1%
Interest Expense	Rs m	430,355	529,901	23.1%
Net Interest Income	Rs m	275,783	328,947	19.3%
Operating Expense	Rs m	279,237	302,454	8.3%
Pre-provision Operating Profit	Rs m	232,977	279,743	20.1%
Provisions & Contingencies	Rs m	175,026	171,665	-1.9%
Profit before tax	Rs m	91,450	144,267	57.8%
Tax	Rs m	33,499	36,189	8.0%
Profit after tax	Rs m	61,248	112,547	83.8%
Minority Interest	Rs m	-336	-898	-167.4%
Net Interest Margin	%	2.7	2.8
Net profit margin	%	8.7	13.1

Download Now: 7 Unstoppable Growth Engines of India's $10 Trillion Bull Run...

CANARA BANK Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 11,790.9 bn as compared to Rs 10,863.4 bn in FY22, thereby witnessing an increase of 8.5%.
• Advances for the year stood at Rs 8,309.3 bn as compared to Rs 7,038.6 bn during FY22, a rise of 18.1%.
• Cost of deposits for CANARA BANK rose 13.1% and stood at 4.1%, while yield on advances rose to 7.4%.
• The lender's investments rose to Rs 3,528.9 bn during the year from Rs 3,113.5 bn in FY22.
• Borrowing stood at Rs 580.7 bn, a growth of 25.5% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 13,810.3 bn as against Rs 12,587.9 bn during FY22, thereby witnessing a rise of 9.7%.

CANARA BANK Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	699,613	780,538	11.6%
Advances	Rs m	7,038,641	8,309,292	18.1%
Deposits	Rs m	10,863,410	11,790,865	8.5%
Yield on advances	%	7.1	7.4
Cost of Deposits	%	3.7	4.1
Investments	Rs m	3,113,472	3,528,927	13.3%
Borrowings	Rs m	462,850	580,732	25.5%
Total Assets	Rs m	12,587,887	13,810,296	9.7%

Current Valuations for CANARA BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 62.0, an improvement from the EPS of Rs 33.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 313.7, stands at 4.1 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 0.7 times, while the price to income ratio stands at 0.5 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	389.2	473.4
Earnings per share (Unadj.)	Rs	33.8	62.0
Diluted earnings per share	Rs	33.8	62.0
Avg P/E ratio	Rs	5.9	4.1
Avg P/ABV ratio	Rs	0.5	0.7
Avg Market Cap	Rs	360,241	465,597
Dividends per share (Unadj.)	Rs	6.50	12.00

Ratio Analysis for CANARA BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 70.5x during FY23, from 64.8x during FY22. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 15.85x during FY23, from 16.19x during FY22. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): CANARA BANK's capital adequacy ratio (CAR) was at 16.7% as on 31 March 2023 as compared to 14.9% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 14.4% during FY23, from 8.8% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 0.81% during FY23, from 0.49% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 14.75% during FY23, from 10.87% during FY22. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. CANARA BANK's gross NPA ratio stood at 5.4% as of 31 March 2023 compared to 7.5% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of CANARA BANK was 1.7% in financial year 2023. This compared with 2.7% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	64.8	70.5
Debt to Equity Ratio	x	16.2	15.9
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	14.9	16.7
Return on Equity	%	8.8	14.4
Return on Assets	%	0.5	0.8
Return on Capital Employed	%	10.9	14.8
% of Gross NPAs	%	7.5	5.4
% of Net NPAs	%	2.7	1.7
Yield on Advances	x	7.1	7.4
Yield on Investments	x	7.0	6.4

To see how CANARA BANK has performed over the last 5 years, please visit here.

CANARA BANK Share Price Performance

Over the last one year, CANARA BANK share price has moved up from Rs 211.1 to Rs 313.7, registering a gain of Rs 102.6 or around 48.6%.

Meanwhile, the S&P BSE BANKEX is trading at 49,789.9 (up 0.4%). Over the last one year it has moved up from 40,661.7 to 49,789.9, registering a gain of 9,128.3 points (up 22.4%).

Overall, the S&P BSE SENSEX is up 12.9% over the year.

(To know more, you can check out historical annual results for CANARA BANK here and quarterly results for CANARA BANK here)