Canara Bank Q4 Results Review - Margin Outlook Steady; Remain Watchful Of ECL Provisioning: Motilal Oswal

Motilal Oswal Report

Canara Bank reported a mixed quarter with profit after tax up 91% YoY to Rs 31.7 billion (in line), driven by higher ‘other income’ even as net interest income/pre-provision operating profit saw a miss. NII grew 23% YoY (8% miss), while margins expanded marginally by 2 basis point QoQ to 3.07%.

On the business front, loan growth sustained its momentum at ~18% YoY, while deposits grew 9% YoY (1.4% QoQ), aided by higher growth in current account and savings account deposits.

The asset quality ratios have shown improvement due to moderation in fresh slippages and the combined effect of healthy recoveries, upgrades and write-offs.

We revise our estimates slightly to factor in lower provisions and expect Canara Bank to deliver FY25E return on asset/return on equity of 1.1%/17.8%.

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