Canara Bank stocks gave 44.4% returns last year; should invest in Canara Bank now? Know what analysts say The bank has a pan-India presence across urban and rural areas and has 9,623 branches. The bank is focusing on increasing the share of highyielding RAM (retail, agriculture, MSME) assets. In addition, various digital initiatives have been undertaken by the bank to improve customer convenience. Should you invest in this banking stock now?
The public sector bank reported a 10.9% year-on-year growth in the standalone net profit in the June 2024 quarter, aided by lower provisions. However, the earnings marginally missed Reuters-Refinitiv estimates by 0.6% as the business growth was impacted due to the higher cost of funds and lower other income. While term deposits aided the deposit growth rate of 12% y-o-y, the retail segment supported the loan book, which registered a growth of 10.7%. Though NIMs contracted during the quarter, the management is confident of maintaining margins at 2.95-3% at the end of 2024-25. The current NIMs stand at 2.9%.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} The bank has a pan-India presence across urban and rural areas and has 9,623 branches. It is a beneficiary of the banking sector’s long-term structural strengths. Rising incomes, buoyant economic growth prospects, significant under-penetration of credit, rebound in loan demand from retail, MSME and corporate segments, increasing digital adoption and product innovation are some of the factors that will continue to enhance the demand for banking and financial services.
The bank is focusing on increasing the share of highyielding RAM (retail, agriculture, MSME) assets. In the June quarter, RAM constituted 57% of the total loan book, compared to 56.4% at the end of 2023-24. It is also aiming to improve its CASA ratio to lower its funding costs.
It has taken various steps to strengthen its retail lending segment. For housing loans, it has tied up with builders and corporate DSAs to improve loan sourcing. To strengthen the vehicle loan portfolio, the bank has collaborated with vehicle dealers and manufacturers (integrated Maruti Suzuki finance portal with its digital platform). It has also integrated the Jan Samarth portal with its loan origination system for facilitating education loans.
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In addition, various digital initiatives have been undertaken by the bank to improve customer convenience. Some of these include pre-approved personal loans under the digital lending platform, the UPI123 feature for payment to nine ASI monument sites, new functionalities for credit cards through the WhatsApp channel, and green term deposits through mobile banking. This is expected to improve operational efficiency.
The asset quality is improving steadily, with sequential improvement in GNPA/NNPA during the quarter, aided by modest recovery and writeoffs. However, the SMA 0 book (loans showing early signs of stress) spiked on a sequential basis due to a large PSU account. It is taking steps for NPA management with credit monitoring and strengthening recovery efforts. The stock has outperformed the sector and market benchmarks in the past year, with 44.4% returns, compared to the Nifty PSU Bank and Nifty 50 indices that delivered 34.2% and 24.6% returns, respectively.
Selection methodology: We pick the stock that has shown the maximum increase in ‘consensus analyst rating’ during the past three months. The consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (1 for strong buy, 2 for buy, 3 for hold, 4 for sell, 5 for strong sell). An improvement in consensus analyst rating indicates that the analysts are getting bullish on the stock. Only stocks with more than five analysts covering them are considered. You can see similar consensus analyst rating changes during the past week in ETW 50 table.
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This story originally appeared on: India Times - Author:Faqs of Insurances
