Project Report on Canara Bank- Commerical Banking Industry Topic
SWOT Analysis of Canara Bank
Strengths
■ Boasts an unbroken record of profits since its inception.
■ Comfortable capital adequacy ratio.
■ Expanded its branch and ATM network during the 2012 fiscal year.
■ Recently consolidated its business position by rebalancing its assets
and liabilities.
Weaknesses
■ Potential for political interference.
■ Limited presence in western India.
■ High levels of non-performing assets.
Opportunities
■ Drive to increase its overseas presence.
■ The bank may expand into Western markets.
■ The bank has been one of the fastest to increase infrastructure
lending in recent years, ahead of its rivals.
■ Net worth of the bank increased during 2012.
Threats
■ Continued global economic downturn.
Company Overview Canara Bank,
based in Bangalore, is India's 11th 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 4,000 branches and
more than 2,000 ATMs (during the 2012 fiscal year, the bank opened 343 new
branches and 642 ATMs). Of these branches, 2,681 have internet and mobile banking
services and 2,091 offer 'Anywhere Banking' services. All of its branches offer
real-time gross settlement and national electronic funds transfer facilities.
As of the end of June 2012, Canara Bank occupied a premier position in the
Indian banking sector and boasts an unbroken record of profits since its
inception. Canara recorded total staff of 43,397 as of the end of March 2011.
Our core view on the Indian
economy sees a cyclical upturn in the coming years, with full-year real GDP growth
projected to rebound to 5.5% this fiscal year (FY2013/14 [April-March]) from an
estimated growth rate of 5.0% in FY2012/13 (see 'Cyclical Bounce Capped By
Lingering Twin Deficits', April 5). Having said that, given the uncertain
environment on the back of the continued presence of the country's lingering
twin deficits - high current account and budgetary shortfalls - we believe that
any rebound in growth is likely to be muted, without the historical vigour
witnessed in previous recoveries. In this article, we look at indicators of
banking sector activity, and what they suggest about the nature of India's impending
growth bounce. With regards to our projections for the banking sector's
prospects this year, we are forecasting total asset growth to rebound to 20.0%
this year, from the slowdown to 13.2% growth in 2012.
Despite our sanguine outlook, we
are not expecting a particularly forceful recovery in economic growth in the
coming fiscal year. To be sure, our FY2013/14 real GDP growth forecast of 6.1%
would be well below the 10-year trend growth rate of 8.0%. While a weaker
external climate goes some way to explain this, we believe that the
government's persistent fiscal failings are perhaps the largest impediment to
stronger growth. New Delhi's failure to rein in the fiscal deficit has been a
major reason behind India's struggles with stubborn inflation, historically
high interest rates and a record current account shortfall. These factors have,
in turn, exhausted investor patience with India's growth story.
In a worst case scenario, in
which the government fails to make any progress on deficit reduction in the coming
months, there is a possibility that India will lose its coveted investment
grade status. Indeed, Fitch Ratings and Standard & Poor's, two of the 'Big
Three' agencies, have already sounded out warnings on this front. A downgrade
to junk would knock any nascent investment rebound off track, and potentially
see Indian real GDP growth languish in the low-to-mid-single-digits for an
extended period.
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