Canara Bank Q4 Results Review - Earnings Inline; Asset Quality Improves Further: Motilal Oswal

Motilal Oswal Report

Canara Bank reported Q4 FY24 standalone profit after tax of Rs 37.6 billion (up 18% YoY, in line), driven by higher other income. Net interest income grew 11.2% YoY (in line), while margins improved 4 bp QoQ to 3.07%.  Other income grew 9.3% YoY to Rs 52.2 billion (up 21.5% QoQ, 14% beat). Pre-provision operating profit thus grew 2% YoY (5% beat).

On the business front, loan book grew 12.2% YoY (1.2% QoQ), while deposits grew 11.3% YoY (3.9% QoQ) to Rs 13.1 trillion. The current account and savings account ratio, thus, expanded 64 bp QoQ to 32.3%. 

Gross/net non-performing asset ratios improved 16 bp/5 bp QoQ to 4.23%/1.27%,. Fresh slippages increased to Rs 30.8 billion versus Rs 26.9 billion in Q3 FY24.

Return on asset/return on equity stood at 1.01%/22.1% as against the guidance of 1%/19.5% for FY24.

We broadly maintain our estimates and expect CBK to deliver FY26 RoA/RoE of 1.1%/18.4%. Reiterate Buy with a target price of Rs 650 (one time FY26E adjusted book value).

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