Corporation Bank-Strong Growth Ahead Corporation Bank incorporated in 1904, is a mid ‐cap government ownedbank (57.2%) with a balance sheet size of approximately Rs 1116bn (as on 31.3.2010) and it has a network of 1217 branches. The bank has migrated all its units to the Core Banking solutions (CBS) covering 100% business. The bank has more than 47% of its branches located in southern part of India. Life Insurance Corporation of India holds 26% stake in the bank.
Key Highlights
The average credit book of the bank in FY2010 has grown at strong rate of 30.3% YoY, higher than the industry level of 16.6% YoY. The management expects strong growth to continue ‐ advances to grow by 25% YoY levels inFY2011E compared to our anticipated 20% YoY growth for the industry.
One of the core strength of the bank is its better asset quality than peers as its provision coverage is also high at 80.7%. Gross NPA stood at 1.02% on 31.3.2010 as compared to 1.14% on 31.3.2009 and Net NPA stood at 0.31% on 31.3.2010 compared to 0.29% as on 31.3.2009. The bank expects to maintain its asset quality going forward.
Corporation bank has been expanding its branch network at a rapid pace during FY2010 it opened 123 new branches while during FY2009 it added 73 branches. It plans to add over 800 new branches over next 5 years and implement Pan India presence.
We like Corporation Bank for its strong credit growth, significant improvement in asset quality, better operational efficiency, higher coverage ratios and rapid expansion in branch network. At CMP of 521, the bank is trading at 0.9x its adjusted BV of Rs 628 for FY2012E. Strong Credit growth, higher than Industry average The average credit book of the bank in FY2010 has grown at strong rate of 30.3% YoY, higher than the industry level of 16.6% YoY. The management expects strong growth to continue FY2011E compared to our anticipated 20% YoY growth for the industry. Bank has been witnessing growth across all segments we expect the bank's loan mix to remain unchanged with large corporates occupying the dominant share of about 40% and retail loans at 19 |
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