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2QFY2012 Result Update | Banking

November 1, 2011

Canara Bank
Performance Highlights

Particulars (` cr) NII Pre-prov. profit PAT 2QFY12 1,962 1,605 852 1QFY12 1,793 1,270 726 % chg (qoq) 9.4 26.4 17.4 2QFY11 2,003 1,416 1,008 % chg (yoy) (2.1) 13.4 (15.4)

ACCUMULATE
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Banking 21,168 0.9 844/401 94,922 10 17,481 5,258 CNBK.BO CBK@IN

`478 `510
12 months

Source: Company, Angel Research

For 2QFY2012, Canara Bank registered a 15.4% yoy decline in its net profit, in-line with our expectations. However, provisioning expenses were considerably higher than expected offset by stronger NII and healthy rise in other income (driven by recoveries from written-off accounts and higher trading profits). We maintain our Accumulate recommendation on the stock. NIM improves in-line with peers; slippages remain elevated but largely offset by higher recoveries and aggressive write-offs: For 2QFY2012, the banks overall business momentum remained moderate, with advances increasing marginally by 1.4% qoq (up 23.8% yoy) and deposits accretion rising by 4.1% qoq (up 25.4% yoy). Saving account deposits growth was relatively healthy at 17.9% yoy; however, the 5.3% yoy decrease in current account balances pulled down overall CASA deposits growth to 12.2% yoy. Calculated CASA ratio improved, albeit marginally by 50bp qoq, to 25.8% (down 305bp yoy). A relatively faster (22bp qoq) rise in yield on advances vis--vis an 8bp qoq rise in cost of deposits led to a 22bp sequential improvement in reported NIM to 2.6%. Other income growth was robust 65.8% yoy, driven by doubling of recoveries from written-off accounts and substantially higher trading profits. On the asset-quality front, slippages continued to remain at elevated levels as the bank completed the migration to system-based NPA recognition platform. However, the rise in NPAs was largely contained on the back of higher recoveries and aggressive write-offs. Gross and net NPA ratios remained largely stable at 1.73% and 1.43%, respectively. Outlook and valuation: Incremental asset-quality pressures are expected to moderate going forward, as the bank has completed the migration to system-based NPA recognition platform. Also, recoveries and upgrades especially from the recent slippages are likely to pick up going forward, as witnessed in 2QFY2012. At the CMP, the stock is trading at reasonable valuations, in our view, of 0.9x FY2013E ABV. Hence, we maintain our Accumulate recommendation on the stock with a target price of `510. Key financials
Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 67.7 10.9 14.6 6.7

Abs. (%) Sensex Canara Bank

3m (4.6) (5.4)

1yr (14.1) (35.6)

3yr 78.6 189.2

FY2010 5,681 20.4 3,021 45.8 2.4 73.7 6.5 1.6 1.2 26.8

FY2011 7,823 37.7 4,026 33.2 2.7 90.9 5.3 1.2 1.3 26.4

FY2012E 7,964 1.8 3,385 (15.9) 2.2 76.4 6.3 1.1 0.9 17.6

FY2013E 9,372 17.7 3,790 12.0 2.3 85.6 5.6 0.9 0.9 17.2

Vaibhav Agrawal
022 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com

Shrinivas Bhutda
022 3935 7800 Ext: 6845 shrinivas.bhutda@angelbroking.com Varun Varma 022 3935 7800 Ext: 6847 varun.varma@angelbroking.com

Please refer to important disclosures at the end of this report

Canara Bank | 2QFY2012 Result Update

Exhibit 1: 2QFY2012 performance


Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income Other income excl. treasury - Fee Income - Treasury Income - Recov. from written-off a/cs - Others Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & Contingencies - Provisions for NPAs - Other Provisions PBT Provision for Tax PAT Effective Tax Rate (%)
Source: Company, Angel Research

2QFY12 1QFY12 % chg (qoq) 2QFY11 % chg (yoy) 7,614 5,826 1,730 59 5,653 1,962 828 679 204 149 135 340 2,790 1,185 767 418 1,605 553 477 76 1,052 200 852 19.0 7,181 5,483 1,633 64 5,388 1,793 527 604 174 (77) 66 364 2,320 1,050 668 382 1,270 345 285 60 926 200 726 21.6 6.0 6.3 5.9 (8.8) 4.9 9.4 57.2 12.5 17.3 103.7 (6.4) 20.3 12.9 14.9 9.4 26.4 60.5 67.3 28.2 13.6 17.4 (259)bp 5,577 4,110 1,417 51 3,574 2,003 500 498 174 2 65 259 2,503 1,087 727 360 1,416 158 207 (49) 1,258 250 1,008 19.9 36.5 41.8 22.1 14.7 58.2 (2.1) 65.8 36.4 17.2 9,330.4 107.7 31.4 11.5 9.0 5.4 16.1 13.4 250.3 130.7 (256.6) (16.3) (20.0) (15.4) (87)bp

Exhibit 2: 2QFY2012 Actual vs. Estimates


Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Company, Angel Research

Actual 1,962 828 2,790 1,185 1,605 553 1,052 200 852

Estimates 1,846 640 2,487 1,090 1,397 301 1,096 230 866

Var. (%) 6.2 29.4 12.2 8.7 14.9 83.6 (4.0) (13.1) (1.6)

November 1, 2011

Canara Bank | 2QFY2012 Result Update

Exhibit 3: 2QFY2012 performance analysis


Particulars Balance sheet Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) Calculated CASA ratio (%) CAR (%) Tier 1 CAR (%) Profitability Ratios (%) Cost of deposits Yield on advances Yield on investments Yield on funds Cost of funds Reported NIM Cost-to-income ratio Asset quality Gross NPAs (` cr) Gross NPAs (%) Net NPAs (` cr) Net NPAs (%) PCR incl. tech. w/offs (%) Slippage ratio (%) NPA to avg. assets (%)
Source: Company, Angel Research

2QFY12 217,937 312,577 69.7 16,732 64,043 80,775 25.8 12.8 9.2 7.1 10.7 7.9 8.8 6.6 2.6 42.5 3,793 1.7 3,117 1.4 68.6 2.3 0.5

1QFY12 215,015 300,150 71.6 15,193 60,912 76,105 25.4 13.4 9.6 7.1 10.5 7.9 8.7 6.5 2.4 45.2 3,606 1.7 2,871 1.3 69.5 2.6 0.3

%chg (qoq) 1.4 4.1 (191)bp 10.1 5.1 6.1 49bp (59)bp (44)bp 8bp 22bp 3bp 10bp 5bp 22bp (278)bp 5.2 6bp 8.6 9bp (91)bp (26)bp 21bp

2QFY11 176,071 249,187 70.7 17,662 54,339 72,001 28.9 13.9 8.8 5.7 9.6 7.6 8.1 5.3 3.2 43.4 2,636 1.5 1,860 1.1 77.1 1.5 0.3

%chg (yoy) 23.8 25.4 (94)bp (5.3) 17.9 12.2 (305)bp (110)bp 33bp 144bp 111bp 28bp 64bp 125bp (52)bp (98)bp 43.9 24bp 67.6 37bp (844)bp 85bp 24bp

Business growth remains moderate; NIM improves


For 2QFY2012, the banks overall business growth remained moderate, in-line with the trend witnessed in 1QFY2012. Advances increased by just 1.4% qoq (up 23.8% yoy) and deposits grew by 4.1% qoq (up 25.4% yoy). Advances growth on a yoy basis was driven by agricultural loans (up 37.3% yoy) and retail loans (up 23.4% yoy). The share of infrastructure loans to total advances increased by 70bp qoq (up 160bp yoy) to 17.1%.

Exhibit 4: MSME and agriculture witness healthy sequential traction


Particulars (` cr) Agri SME Corporate Retail Net advances
Source: Company, Angel Research

2QFY12 32,796 39,770 25,102

1QFY12 % chg (qoq) 30,463 37,000 24,042 7.7 7.5 (2.6) 4.4

2QFY11 % chg (yoy) 23,882 32,801 99,054 20,334 37.3 21.2 21.4 23.4 23.8

120,269 123,510 217,937 215,015

1.4 176,071

November 1, 2011

Canara Bank | 2QFY2012 Result Update

On the deposits side, volatile current account deposits increased by 10.1% qoq (down 5.3% yoy). Saving account deposits growth was relatively better than peers at 17.9% yoy (up 5.1% qoq). Overall CASA deposits growth picked up a bit from sub-10% levels witnessed in 1QFY2012 to 12.2% yoy. Consequently, calculated CASA ratio improved marginally by ~40bp qoq to 25.8%.

Exhibit 5: Business growth remains moderate


Adv. qoq chg (%) 15.0 12.0 9.0 6.0 70.7 69.7 72.1 72.3 71.6 72.0 Dep. qoq chg (%) CDR (%, RHS) 74.0

Exhibit 6: CASA deposits growth picks up a bit


Calculated CASA ratio 30.0 27.5 25.0 70.0 27.7 22.9 21.8 20.0
9.7

CASA yoy growth (%, RHS) 30.0

12.2 10.0

28.9

29.0

28.3

25.4

1.3 4.3

7.8 5.7

1.2 2.1

2QFY11 3QFY11 4QFY11 1QFY12 2QFY12


Source: Company, Angel Research

1.4 4.1

3.0

11.9 11.6

68.0

25.8

22.5 20.0

2QFY11 3QFY11 4QFY11 1QFY12 2QFY12

Source: Company, Angel Research

Higher yield on advances and recovery of interest income of `217cr on NPAs recognized during the previous quarters aided the bank in improving its reported NIM by 22bp qoq to 2.6%. The bank had to reverse interest income of `120cr on NPAs recognized during the quarter, primarily pertaining to the implementation of system-based NPA recognition platform. With sequentially incremental CASA ratio rising to 37.6%, cost of deposits increased only marginally by 8bp to 7.1%.

Exhibit 7: Uptick in yield on advances...


(%) 11.00 10.00 9.00 8.00 7.00 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 9.61 9.67 9.73 10.50 10.72

Exhibit 8: ...leads to qoq expansion in reported NIM


(%) 3.50 3.00 2.50 2.00 1.50 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3.16 3.31 2.99 2.64 2.42

Source: Company, Angel Research

Source: Company, Angel Research

Other income growth driven by trading profits and recoveries


Fee income growth picked up a bit from the sluggish 6.1% yoy witnessed in 1QFY2012 to 17.2% yoy in 2QFY2012. Despite hardening interest rates, the bank managed to increase its trading profits to `149cr from just `2cr earned during 2QFY2011 and a loss of `77cr in 1QFY2012. Even recoveries from written-off accounts the primary catalyst of the banks earnings growth over the past few years witnessed a sharp 103.7% qoq and 107.7% yoy rise to `135cr. For FY2012, management had guided of achieving recoveries of over `500cr from written-off accounts. During 1HFY2012, the bank has managed to recover ~`200cr from these accounts.
November 1, 2011

Canara Bank | 2QFY2012 Result Update

Exhibit 9: Treasury income and recoveries drive other income growth


Particulars (` cr) CEB Treasury Recoveries Others Other income Other income excl. treasury
Source: Company, Angel Research

2QFY12 1QFY12 204 149 135 340 828 679 174 (77) 66 364 527 604

% chg (qoq) 2QFY11 17.3 103.7 (6.4) 57.2 12.5 174 2 65 259 500 498

% chg (yoy) 17.2 9,330.4 107.7 31.4 65.8 36.4

Slippages remain high, largely offset by higher recoveries and aggressive write-offs
With the completion of migration to system-based NPA recognition platform, the banks slippage levels remained elevated in 2QFY2012 as well. Annualized slippage ratio for 2QFY2012 stood at 2.3%, down ~30bp from 1QFY2012 levels. About half of the slippages witnessed during the quarter pertained to loan accounts below `2lakhs. However, due to healthy recoveries of ~`480cr and aggressive write-offs of `408cr during the quarter, the bank was able to contain the rise in gross NPA ratio at sequentially stable levels. Provision coverage ratio including technical write-offs declined by 91bp qoq and by sharp 844bp yoy to 68.6%, indicating the reducing cushion on profit and loss account from future slippages. Advances restructured during the quarter were considerably lower at just `21cr. Cumulative outstanding restructured advances stood at `8,519cr, of which `799cr has already slipped into NPAs (including `115cr slipped during 2QFY2012).

Exhibit 10: Slippages come off but remain high


Slippages (%) 5.0 4.0 3.0 2.0 1.0 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 0.3 0.2 0.3 0.7 0.5 Credit cost (%, RHS) 0.8 0.6 0.4 0.2 -

Exhibit 11: Sequentially stable NPA ratios


Gross NPAs (%) 2.0 1.5 1.0 0.5 77.1 75.9 73.0 69.5 68.6 Net NPAs (%) PCR (%, RHS) 80.0 75.0 70.0 65.0

1.5

1.2

4.4

2.6

2.3

1.5 1.1

1.4 1.1

1.5 1.1

1.7 1.3

2QFY11 3QFY11 4QFY11 1QFY12 2QFY12

1.7 1.4
60.0

Source: Company, Angel Research

Source: Company, Angel Research; Note: PCR including tech. write-offs

Opex under control; branch expansion gains momentum


The banks operating expenses were in check during the quarter. Operating expenses rose by 9.0% yoy as compared to the 11.5% increase in operating income, resulting in an improvement in cost-to-income ratio from 43.4% in 2QFY2011 to 42.5% in 2QFY2012. Opex-to-average assets ratio increased to normal levels at 1.4% from 1.2% registered in 1QFY2012.

November 1, 2011

Canara Bank | 2QFY2012 Result Update

The bank expanded its branch network quite aggressively during the quarter, with the opening of 160 branches (rise of ~5% qoq), taking its network size to 3,437 branches. In fact, over the past one year alone, the bank has added 371 branches, representing 12.1% growth in its network. The bank has also added 606 ATMs during the past one year. Management plans to add another 180 branches and 400 ATMs in 2HFY2012.

Exhibit 12: Strong rise in branch network


3,500 3,350 3,200 3,066 3,050 2,900 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3,174 3,437 3,277

Exhibit 13: Cost ratios largely in check


Cost-to-income ratio (%) 46.0 44.0 42.0 1.6 1.6 1.5 1.2 Opex to average assets (%, RHS) 2.0 1.4 1.5 1.0

3,257

43.4

43.0

41.7

45.2

38.0 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12


Source: Company, Angel Research

42.5

40.0

0.5 -

Source: Company, Angel Research

Comfortable capital adequacy


The bank had raised ~`2,000cr via Qualified Institutional Placement (QIP) of `1,993cr in 1QFY2012, which has helped in shoring up tier-I capital ratio at over 10.5%. During 2QFY2012, CAR declined to 12.8%, with tier-I CAR of 9.2%. Though the governments holding in the bank has come down to 67.7% post the QIP, there is still substantial headroom for raising tier-I capital going forward.

Investment concerns
Weak liability franchise likely to keep NIM under pressure
The bank has a relatively weaker liability profile with calculated CASA base at 25.8%. In fact, in 2QFY2012, overall CASA deposits growth remained moderate at 12.2% yoy as compared to 22.9% yoy growth witnessed in 2QFY2011. The bank has a relatively higher proportion of more costly bulk deposits and CDs at ~30% of deposits, which makes the bank more vulnerable to a faster rise in cost of funds in the current higher interest rate scenario. Margin pressures were evident in 2QFY2012 also, with NIM improving by just 22bp in spite of `220cr of interest income from NPA recoveries. Accordingly, we have built in a ~50bp dip in NIM for FY2012 over FY2011 levels.

Outlook and valuation


The bank has embarked on a relatively aggressive network expansion plan. Over the past one year, the bank has added over 370 branches and 600+ ATMs. In fact, in 2QFY2012 itself, the bank added 160 branches (180 branches in 1HFY2012) and plans to add another 180 branches in 2HFY2012. The relatively better pace of network expansion should augur well, in our view, for strengthening the banks relatively weaker liability franchise.
November 1, 2011

Canara Bank | 2QFY2012 Result Update

We have revised our estimates to factor in a better-than-expected NIM trajectory witnessed in 2QFY2012. We are building in higher provisioning expenses due to the weaker asset-quality trend in 1HFY2012 and the deteriorating macro economic outlook. We largely maintain our estimates for FY2012 as well as FY2013. Over the past one year, the stock has underperformed the Sensex by 21.5% and the Bank Nifty by 12.7%, primarily on asset-quality concerns. Incremental slippages are expected to moderate going forward, as the bank has completed the migration to system-based NPA recognition platform. Also, recoveries and upgrades especially from the recent slippages are likely to pick up going forward, as witnessed in 2QFY2012. At the CMP, the stock is trading at reasonable valuations, in our view, of 0.9x FY2013E ABV as compared to its five-year range of 0.85-1.45x with a median of 1.17x. Hence, we maintain our Accumulate stance on the stock with a target price of `510.

Exhibit 14: Key assumptions


Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Treasury gain/(loss) (% of investments)
Source: Angel Research

Earlier estimates FY2012 17.0 17.0 27.5 2.1 0.8 (5.0) 12.0 1.9 (0.2) FY2013 19.0 17.0 26.8 2.1 30.0 15.0 15.0 1.8 0.2

Revised estimates FY2012 17.0 17.0 27.5 2.2 7.8 2.0 15.0 2.3 0.1 FY2013 18.0 17.0 26.8 2.3 18.1 15.0 15.0 2.2 0.2

Exhibit 15: Change in estimates


FY2012 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

FY2013 Earlier estimates 8,645 3,541 12,186 5,114 7,072 1,446 5,626 1,825 3,801 Revised Var. (%) estimates 9,372 3,441 12,813 5,403 7,410 1,800 5,611 1,820 3,790 8.4 (2.8) 5.1 5.6 4.8 24.5 (0.3) (0.3) (0.3)

Earlier estimates 7,573 2,724 10,297 4,447 5,850 1,181 4,669 1,167 3,502

Revised Var. (%) estimates 7,964 2,913 10,878 4,698 6,179 1,839 4,340 955 3,385 5.2 6.9 5.6 5.6 5.6 55.7 (7.0) (18.2) (3.3)

November 1, 2011

Canara Bank | 2QFY2012 Result Update

Exhibit 16: P/ABV band


Price (`) 1000 800 600 400 200 0 0.75x 1x 1.25x 1.5x 1.75x

Dec-07

Apr-06

Jul-07

Mar-09

Aug-09

Feb-07

Oct-08

Apr-11

May-08

Source: Company, Angel Research

Exhibit 17: Recommendation summary


Company AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI BOM CanBk CentBk CorpBk DenaBk IDBI IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk
#

Reco. Buy Accumulate Neutral Buy Accumulate Buy Accumulate Neutral Accumulate Accumulate Accumulate Accumulate Neutral Buy Neutral Neutral Neutral Accumulate Neutral Accumulate Accumulate Buy Buy Neutral Accumulate Accumulate Neutral

CMP (`) 1,135 415 482 895 23 308 149 121 799 337 51 478 102 430 81 114 217 100 825 289 1,013 1,902 107 75 222 74 60

Tgt. price (`) 1,414 444 1,114 24 355 163 881 362 55 510 498 107 314 1,106 2,239 123 238 82 -

Upside (%) 24.5 7.0 24.4 5.3 15.5 9.5 10.4 7.5 9.7 6.8 15.9 7.7 8.7 9.1 17.7 15.4 7.5 10.9 -

FY2013E P/ABV (x) 1.8 1.1 3.3 1.6 1.1 1.9 0.7 0.8 1.1 0.9 0.7 0.9 0.7 0.7 0.6 0.7 0.9 0.6 0.9 0.7 1.1 1.4 0.7 0.9 0.8 0.6 0.8

FY2013E Tgt P/ABV (x) 2.3 1.2 2.0 1.2 2.3 0.8 1.2 1.0 0.7 1.0 0.8 0.7 0.7 1.3 1.7 0.8 0.9 0.7 -

FY2013E P/E (x) 9.9 8.5 16.8 13.2 6.7 10.2 4.2 5.4 5.7 5.6 4.3 5.6 5.0 4.4 3.9 5.4 5.6 4.0 5.7 5.1 6.0 7.3 4.7 4.6 5.1 4.4 7.3

FY2011-13E EPS CAGR (%) 17.7 19.5 30.5 23.3 15.6 19.9 8.9 (0.9) 14.2 15.2 38.1 (3.0) (14.6) 1.5 5.8 12.3 0.2 20.0 6.7 5.4 9.9 41.4 11.8 14.0 5.2 11.7 (3.2)

Nov-10

FY2013E RoA (%) 1.5 1.2 1.7 1.4 1.0 1.3 0.9 0.9 1.2 0.7 0.6 0.9 0.5 0.8 0.8 0.7 1.1 0.6 1.2 0.8 1.1 1.0 0.7 0.6 0.8 0.6 0.4

FY2013E RoE (%) 20.0 14.0 20.9 15.4 18.2 20.8 17.7 15.8 20.7 17.1 16.5 17.2 14.2 16.6 16.2 14.0 17.4 15.9 16.4 13.9 20.6 21.9 16.3 16.5 17.0 13.8 10.5

IndBk

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF

November 1, 2011

Feb-12

Sep-06

Sep-11

Jan-10

Jun-10

Canara Bank | 2QFY2012 Result Update

Income statement
Y/E March (` cr) Net Interest Income - YoY Growth (%) Other Income - YoY Growth (%) Operating Income - YoY Growth (%) Operating Expenses - YoY Growth (%) Pre - Provision Profit - YoY Growth (%) Prov. & Cont. - YoY Growth (%) Profit Before Tax - YoY Growth (%) Prov. for Taxation - as a % of PBT PAT - YoY Growth (%) FY08 3,538 (12.1) 2,308 52.7 5,846 5.6 2,791 8.8 3,055 2.7 1,150 (11.7) 1,905 14.0 340 17.8 1,565 10.1 FY09 4,718 33.4 2,427 5.1 7,145 22.2 3,065 9.8 4,080 33.5 1,507 31.1 2,572 35.0 500 19.4 2,072 32.4 FY10 5,681 20.4 2,858 17.7 8,538 19.5 3,478 13.5 5,061 24.1 1,239 (17.8) 3,821 48.6 800 20.9 3,021 45.8 FY11 7,823 37.7 2,703 (5.4) 10,526 23.3 4,419 27.1 6,107 20.7 1,081 (12.8) 5,026 31.5 1,000 19.9 4,026 33.2 FY12E 7,964 1.8 2,913 7.8 10,878 3.3 4,698 6.3 6,179 1.2 1,839 70.1 4,340 (13.6) 955 22.0 3,385 (15.9) FY13E 9,372 17.7 3,441 18.1 12,813 17.8 5,403 15.0 7,410 19.9 1,800 (2.2) 5,611 29.3 1,820 32.4 3,790 12.0

Balance sheet
Y/E March (` cr) Share Capital Reserve & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab. & Prov. Total Liabilities Cash Balances Bank Balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY08 410 10,090 154,072 8.2 2,517 6,115 7,175 180,380 13,365 4,513 49,812 107,238 8.9 2,917 2,536 180,380 8.8 FY09 410 11,798 186,893 21.3 7,057 6,944 6,498 219,599 10,037 6,623 57,777 138,219 28.9 2,929 4,014 219,599 21.7 FY10 410 14,262 234,651 25.6 1,041 7,399 6,977 264,741 15,719 3,934 69,677 169,335 22.5 2,859 3,217 264,741 20.6 FY11 443 19,597 293,973 25.3 5,198 9,063 7,805 336,079 22,015 8,693 83,700 212,467 25.5 2,844 6,359 336,079 26.9 FY12E 443 22,261 343,948 17.0 6,072 10,604 9,211 392,539 22,357 10,154 100,792 248,587 17.0 3,223 7,427 392,539 16.8 FY13E 443 25,228 402,419 17.0 7,092 12,513 10,791 458,486 26,157 11,860 114,810 293,332 18.0 3,651 8,675 458,486 16.8

November 1, 2011

Canara Bank | 2QFY2012 Result Update

Ratio analysis
Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov. /Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS (75% cover.) DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage RoE 2.0 0.7 1.4 0.3 1.6 1.1 2.7 1.6 1.1 0.2 0.9 21.1 19.1 2.4 0.8 1.6 0.3 1.9 0.9 2.8 1.5 1.3 0.3 1.0 21.8 22.6 2.3 0.5 1.8 0.4 2.2 0.8 3.0 1.4 1.6 0.3 1.2 21.5 26.8 2.6 0.4 2.2 0.1 2.3 0.8 3.1 1.5 1.7 0.3 1.3 19.7 26.4 2.2 0.5 1.7 0.0 1.7 0.8 2.5 1.3 1.2 0.3 0.9 18.9 17.6 2.2 0.4 1.8 0.0 1.8 0.8 2.6 1.3 1.3 0.4 0.9 19.3 17.2 12.5 2.5 1.7 9.5 2.2 1.7 6.5 1.6 2.1 5.3 1.2 2.3 6.3 1.1 2.9 5.6 0.9 3.3 38.2 188.4 8.0 50.5 221.3 8.0 73.7 305.8 10.0 90.9 401.1 11.0 76.4 449.7 14.0 85.6 510.3 16.0 1.3 0.9 1.4 0.5 34.5 1.6 1.1 2.2 0.5 30.5 1.5 1.1 2.4 0.6 77.7 1.4 0.8 2.1 0.3 73.0 2.5 1.4 2.3 0.4 69.0 3.1 1.5 2.2 0.4 68.0 31.5 69.6 13.3 7.0 30.1 74.0 13.0 7.4 29.1 72.2 12.5 7.9 28.3 72.3 14.2 10.0 27.5 72.3 15.3 10.6 26.8 72.9 15.2 10.3 2.1 47.7 0.9 19.1 2.4 42.9 1.0 22.6 2.4 40.7 1.2 26.8 2.7 42.0 1.3 26.4 2.2 43.2 0.9 17.6 2.3 42.2 0.9 17.2 FY08 FY09 FY10 FY11 FY12E FY13E

November 1, 2011

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Canara Bank | 2QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Canara Bank No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

November 1, 2011

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