Canara Bank-Financial and Strategic Analysis

 

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SWOT ANALYSIS OF CANARA BANK

Strengths

Canara Bank

Company Data Website: www.canarabank.com Status: Public sector bank

• High performance financially.
• Comfortable capital adequacy ratio.

Weaknesses

• Potential for political interference.
• Limited presence in western India.

Opportunities

• Drive to increase its overseas presence.
• The bank may expand into western regions.
• The bank has been one of the fastest to increase infrastructure lending in recent years, ahead of its rivals.

Threats

• The gradual entry of foreign banks, operating more fully, from 2009.
• Continued global economic downturn.

Company Overview

Canara Bank, based in Bangalore, is India's 11^th largest bank in terms of market capitalisation. It was founded in 1906 and nationalised in 1969. It has nine subsidiaries, sponsored institutions and joint ventures in India and abroad. The bank has over 3,000 branches and more than 2,000 ATMs. Of these branches, 1,362 have internet and mobile banking services and 2,062 offer Anywhere Banking services. All of its branches offer real-time gross settlement and national electronic funds transfer facilities.

Canara increased its lending in the infrastructure sector in 2009, rising by 59% y-o-y in July-August that year. The bank is expected to continue increasing its project financing, which tends to bring stable, albeit relatively low, returns.

Canara has expanded its insurance operation, a joint venture with Oriental Bank of Commerce (OBC) and HSBC, to the rural populations in Uttar Pradesh and Karnataka. The expansion in December 2009 includes the joint venture collaborating with rural banks Shreyas Gramin Bank and Pragathi Gramin Bank, accessing their customer base through a combined network of around 550 branches.

The bank established 283 new branches in 2009, with the majority opening in the fourth quarter. Nonetheless, the bank has a limited presence in western India, where it intends to expand in future, possibly through acquisitions.

The bank has identified 21 locations where it wishes to expand globally. Canara has obtained approval from the RBI to open branches or offices in Johannesburg, Frankfurt, Muscat, Manama, Qatar Financial Centre, Leicester, New York, São Paulo, Dar es Salaam and Tokyo.

Table: Stock Market Indicators
	2004	2005	2006	2007	2008	2009	Oct 2010
Market Capitalisation, INR	87,166.00	98,912.50	113,242.01	135,894.50	77,121.00	159,387.50	261,928.49
Market Capitalisation, US$	2,005.66	2,195.62	2,558.56	3,447.79	1,584.41	3,425.66	5,883.39
Share Price, INR	212.60	241.25	276.20	331.45	188.10	388.75	638.85
Share Price, US$	4.89	5.36	6.24	8.41	3.86	8.36	14.35
Share Price, % change (eop)	63.63	9.47	16.53	34.75	-54.05	116.21
Change, year-to-date							18.48
Shares Outstanding (mn)	410.00	410.00	410.00	410.00	410.00	410.00	410.00
Source: Canara Bank, Bloomberg

Table: Balance Sheet (INRmn, unless stated)
	2004	2005	2006	2007	2008	2009
Total Assets	1,013,315	1,111,047	1,337,700	1,665,421	1,809,214	2,204,525
Loans & Mortgages	475,599.7	608,052.1	800,254.5	988,643.4	1,076,143.0	1,383,221.0
Total Deposits	850,578.6	949,971.2	1,145,810.0	1,396,425.0	1,503,320.0	1,830,786.0
Total Shareholders' Equity	58,746.96	65,084.12	76,018.25	108,860.60	108,790.00	127,626.80
Earnings per share (INR)	33.64	33.27	33.65	37.28	43.79	49.81
Source: Canara Bank, Bloomberg

Table: Balance Sheet (US$mn, unless stated)
	2004	2005	2006	2007	2008	2009
Total Assets	23,241.18	25,398.27	29,978.14	38,309.75	45,106.30	43,451.75
Loans & Mortgages	10,908.25	13,899.92	17,933.88	22,741.81	26,829.8	27,263.65
Total Deposits	19,508.68	21,716.11	25,677.86	32,122.03	37,479.93	36,085.26
Total Shareholders' Equity	1,347.41	1,487.81	1,703.59	2,504.13	2,712.29	2,515.56
Earnings per share (US$)	0.73	0.74	0.76	0.82	1.09	1.09
Source: Canara Bank, Bloomberg

Table: Key Ratios (%)
	2004	2005	2006	2007	2008	2009
Return on Assets	1.49	1.28	1.13	1.02	1.03	1.02
Return on Equities	27.30	22.42	19.62	16.59	16.64	17.52
Loan Deposit Ratio	55.91	65.20	70.52	71.12	71.83	75.91
Loan Asset Ratio	46.94	55.74	60.40	59.63	59.69	63.04
Equity Asset Ratio	5.61	5.83	5.66	6.52	5.92	5.71
Total Risk Based Capital Ratio	12.66	12.78	11.22	13.5	13.25	14.1
Tier 1 Capital Ratio	7.81	7.29	7.81	7.17	7.01	8.01
Source: Canara Bank, Bloomberg If you want Dissertations, Thesis, Case Studies on Profitability Analysis of Banks in India, Research Proposals, Term Papers, MBA Project Report on Canara Bank, Research Projects, Assignments, Coursework, Essays, Articles, PowerPoint Presentations and Synopsis, than contact Mahasagar Publications, Mumbai, India by calling +91 9819650213 or +91 8081344446  or visit website www.projectspapers.com