Fundamental Analysis of Canara Bank – Financials, Future Plans & More
Fundamental Analysis Of Canara Bank: Banks are in the process of bringing innovations thereby fueling the financial future for millions of Indians by reaching the Rural remote places of India. The greater supportive push from the Government of India (GOI) with its strategic reforms and relaxed regulations is attracting the population towards benefitting from the […] The post Fundamental Analysis of Canara Bank – Financials, Future Plans & More appeared first on Trade Brains.
Fundamental Analysis Of Canara Bank: Banks are in the process of bringing innovations thereby fueling the financial future for millions of Indians by reaching the Rural remote places of India. The greater supportive push from the Government of India (GOI) with its strategic reforms and relaxed regulations is attracting the population towards benefitting from the Banking Services.
One company to benefit from such reforms is Canara Bank. In this article, we are going to perform a fundamental analysis of Canara Bank and try to understand its future potential. Keep reading to know more.
Fundamental Analysis of Canara Bank – Company Overview
Canara Bank which is into banking operations and is one of the major players with the premier position in the country. It was back in 1906 at Mangalore a visionary named Shri Ammembal Subba Rao Pai founded the Canara Bank in the state of Karnataka. The bank has been through different phases of transformation in its journey to reach the position of what it is today.
Canara Bank in 1969 was nationalized thereby, getting a national player position and with access to a wider reach. The Bank has a long experience of serving its customers and also celebrated its century (100 years) in the year 2006. Canara Bank was the first to launch inter-city ATM networks, it was also the first to obtain ISO certification.
The bank commissioned an exclusive banking branch for Mahila called Mahila Banking Branch. It was the first to issue credit card facilities to farmers and Consultancy services related to agriculture. Now we have a basic idea about the company with the help of the Fundamental Analysis Of Canara Bank.
Segment Analysis
Retail segment: It is one of the bank’s thrust areas, which has subdivisions that include Housing, Vehicle, Education, and other Personal. The lending given out under each of the sub-divisions is shown in the table below,
| Retail Segments | Values are in Crores | ||
|---|---|---|---|
| 2022 | 2023 | Year on Year (Growth) | |
| Housing | ₹73,828 | ₹84,364 | 14.27% |
| Vehicle | ₹14,105 | ₹15,129 | 7.26% |
| Other Personal | ₹25,369 | ₹25,812 | 1.75% |
| Education | ₹12,975 | ₹14,746 | 13.65% |
Agriculture segment: The bank keeps the focus on credit delivery for the agricultural segment. 211562 crores were advanced under the agricultural portfolio which covers over 1.23 crore accounts.
Micro Small & Medium Enterprises (MSMEs): This is another important segment the bank serves by providing the advances. Even the MSME segment comes as one of its priorities, which led them to advance about 1,23,627 Crores as of FY 2023 which is 3.87% higher compared to the previous year.
Industry Overview
India as a country remains a major bright spot, mainly due to the revival of the major sectors which include manufacturing and other Investment activities. India as per the IMF projections is expected to to see a growth of 5.9% and remains the fastest-growing economy in the world.
Reserve Bank of India (RBI) has also made its projections regarding the growth of the Indian economy, And as per its estimation, there would be growth of 6.5% in FY 2023 – 24 which is higher than the IMP projections.
In terms of inflation projection, India is at a moderate level with 5.2% in FY 2023-24 which is comparatively better compared to the previous Financial year. Such aspects are very crucial to look at when we are talking about the banking sector.
Along with the support of the Government and measures taken by RBI, India has a positive outlook with a sufficient capital buffer on one end and improving asset quality on the other end resulting in robust credit growth. The Fundamental Analysis Of Canara Bank has explained various other information about the industry and its sectors.
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Fundamental Analysis Of Canara Bank – Financials
Net Interest Income & Net Profit
The net interest income of the Canara Bank as shown in its financial statements saw growth from 26,384 crores in FY 2022 to 31,435 crores in FY2023 which resulted in year-on-year growth of 19.14%. On the other hand, the Net profits that are available for the equity shareholders stood at 10,604 as of FY 2023 which is a growth of 86.76% as compared to its previous year which was at 5678 crores.
| Fiscal Year | Net Interest Income (In crores) | Net Profit (In Crores) |
|---|---|---|
| 2023 | ₹31,435 | ₹10,604 |
| 2022 | ₹26,384 | ₹5,678 |
| 2021 | ₹24,103 | ₹2,558 |
| 2020 | ₹13,124 | -₹2,236 |
| 2019 | ₹14,478 | ₹347 |
| 4 Year CAGR | 21.39% | 135.12% |
Profit Margins
The Net interest margin of Canara Bank has been stagnant for the last three years ranging between 2.12% in FY21 to 2.38% in FY23. However, their net profits have been growing year on year from 3.84% in FY21 to 12.58% in FY23.
| Fiscal Year | Net Interest Margin (NIM) | Net Profit Margin (NPM) |
|---|---|---|
| 2023 | 2.38% | 12.58% |
| 2022 | 2.19% | 8.20% |
| 2021 | 2.12% | 3.84% |
| 2020 | 1.88% | -4.06% |
| 2019 | 2.19% | 1.14% |
| 5 years Average | 2.15% | 4.34% |
Return Ratios
Canara Bank delivered a Return on equity of 15% for its equity shareholders in FY 2023, which is 6% higher compared to its previous Financial year 2022 which was at 9%. The Return on Assets(ROA) stood at 0.81% as of FY 2023. On a 3-year basis, the Return on Equity ratio stood at 10.82%.
| Fiscal Year | ROE | ROA |
|---|---|---|
| 2023 | 15% | 0.81% |
| 2022 | 9% | 0.48% |
| 2021 | 6% | 0.23% |
| 2020 | -5% | -0.32% |
| 2019 | 2% | 0.06% |
Non-Performing Assets (NPA)
The Nonperforming assets (NPA) which is one of the major challenging aspects for all the banks. By looking at the quarterly reports of the Canara Bank, the value of Non – non-performing assets is seeing a gradual decrease over a period, which is again a good indication for the Bank.
Here in the financials of Fundamental Analysis Of Canara Bank, we have seen the Net interest income, Profit margin, Return ratios, and Non-Performing assets.
The table below shows the NPA percent from the past 5 years:
| Fiscal Year | Gross NPA (%) | Net NPA (%) |
|---|---|---|
| 2023 | 5.35% | 1.73% |
| 2022 | 7.51% | 2.65% |
| 2021 | 8.93% | 3.82% |
| 2020 | 8.21% | 4.22% |
| 2019 | 8.83% | 5.37% |
Fundamental Analysis Of Canara Bank – Key Metrics
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹551 | Market Cap (Crores) | ₹100022 |
| EPS | ₹80.80 | Stock P/E | 6.86 |
| ROE | 16.37% | ROA | 0.81% |
| Promoters Holding | 62.93% | FII Holding | 11.21% |
| Gross NPA (September) | 4.76% | P/B | 1.28 |
Fundamental Analysis Of Canara Bank – Future Plans
- Canara Bank is a quick process to launch its new updated service which provides an End-to-end Digital Lending System, which is considered to be a new age practice.
- To keep its customer service updated with high-end quality, the bank is bringing in an option at the ATM where customers get an option to provide their feedback.
- Another great action of the bank is the introduction of UPI International Acquirer, using which customers will be able to make payments in countries that are identified by the National Payments Corporation of India (NPCI).
- Bank is also making its services by introducing UPI Lite Acquirer, a wallet that allows one to make payments (small value) up to Rs.200 even in the offline mode, highly helpful in the absence of a Core Banking System (CBS).
- Cheggout Integration a new feature that will be added to the ai1 App is another amazing facility that provides the option to compare and shop facility, useful as it provides personalized offers to the merchants.
Conclusion
We come to the end of the Fundamental Analysis Of Canara Bank after looking at its Industry overview, its operations, Fundamentals, and most importantly its plans. The bank being nationalized gets backed by the Government of India and the Reserve Bank of India(RBI).
Risks and opportunities available in front of the Banks particularly in the Indian market have to be analyzed to know more. Do drop your views and thoughts in the comment section below.
Written by Nishanth P
By utilizing the stock screener, stock heatmap, portfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.
The post Fundamental Analysis of Canara Bank – Financials, Future Plans & More appeared first on Trade Brains.
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