canara bank creating value for investors brought to you by bsplindia.com
TRANSCRIPT
2CANARA BANK
Brought to you by Bsplindia.com
Summary
• Third largest Public Sector Bank in India with an asset base of Rs.90644 Crore and market capitalization Rs.5453 Crore.
• Over 2440 branches and 265 lakh accounts with one of the widest retail networks.
• Growth in credit with CAGR of 30% for past 3 years with relatively low Net NPA at 3.28% due to aggressive recovery efforts.
• Cash recoveries Targeting Rs.650 crore during the current fiscal.
• Sustained Treasury Income and adequate cushion for Interest Rate reversals.
3CANARA BANK
Brought to you by Bsplindia.com
Summary
• Focus on better yielding Retail Assets accounting for 15.57% of the net credit. Retail assets at Rs.6369 Crore.
• Focus on Technology Upgradation/ Hi-tech Banking • Subsidiaries are a source of Income and no more a cause
of concern with all the past burdens taken care of.• NIM sustained at around 3.37% coupled with improved
operational efficiency (March 2003 at 3.53%).• RoA of 1.28%, Favorably placed among peer banks.
4CANARA BANK
Brought to you by Bsplindia.com
Creating Wealth
Date Price Market Capitalisation
Dec 2002 Rs. 35.00 Rs.1435 Crore
Oct 2003 Rs.133.00 Rs.5453 Crore
Wealth Created in 10 Months Rs.4018 Crore
Annualized Growth 236%
5CANARA BANK
Brought to you by Bsplindia.com
Banking Sector –Strengthening Fundamentals
Strengthening of Prudential Norms and Market Discipline
Adoption of Appropriate International Standards and Benchmarks
Human Resource Development as a Catalyst of Transformation.
Focus on Technology upgradation
6CANARA BANK
Brought to you by Bsplindia.com
Corporate Objectives 2004
EfficiencyProfitability & ProductivityOrganizational EffectivenessCustomer CentricHi-tech Banking
7CANARA BANK
Brought to you by Bsplindia.com
Plans for 2004
Global Business to reach Rs.131000 Crore at a growth rate of 15.55% - Rs.82000 Crore of Deposits and Rs.49000 Crore of Advances.
Thrust on low cost deposits and 10% growth in client base. Retail Lending expansion at the rate of 35% of incremental
advances Hi-Tech Banking – 500 ATMs, 2000 computerized
branches, 500 branches under Anywhere Banking, RTGS & SFMS
Target of launching Mobile & Internet Banking and Debit Cards already achieved.
8CANARA BANK
Brought to you by Bsplindia.com
Renewed Strategy
Thrust on Technology Reduction in operational cost Better customer service Matching competitive forces
Treasury Management Effective Funds Management Improving Yield Ability to hedge Market Risk
NPA Management Better Asset Quality Higher recoveries Better profitability
Retail Lending High Potential Improvement in spreads Better Asset Quality
9CANARA BANK
Brought to you by Bsplindia.com
A Snap Shot
InvestmentsRS.37300 Crore
DepositsRs.75396 Crore
Total AssetsRs.90644 Crore
CAR13.27% EPS Rs.28.34 *
BV Rs.112.33
Net ProfitRs.581 Crore
Operating ProfitRs.1495 Crore
Net NPA 3.28% of
Net Advances
AdvancesRs.40908 Crore
Bank with a distinguished history of over 97 years of Continuous Profitability
* Annualised
As of 30/09/2003
10CANARA BANK
Brought to you by Bsplindia.com
Strong Business Growth
0
10000
20000
30000
40000
50000
60000
70000
80000
Deposits Advances
Sep-02
Sep-03
0
200
400
600
800
1000
1200
1400
1600
G.Profit N.Profit
• Year on Year Deposit Growth of 11.31% in Sept. 2003.• Year on Year Credit Growth of 15.14% in Sept. 2003.• Credit Deposit Ratio Sustained at the same levels of 56% in Sept 2003.• Gross Profit growth at 57.81% & Net Profit at 38.60% in Sept. 2003.
( Rs.Crore)
11CANARA BANK
Brought to you by Bsplindia.com
Maturity Pattern of Investments
0%
20%
40%
60%
80%
100%
FY 01 FY 02 FY 03 Sep-03
Over 5 Y rs
> 3 Y rs to 5 Y rs
1 Y r to 3 Y rs
< 1 Year
57% 62% 66%
19%11%
15%
9% 10%
12%
13%
13%
13%
65%
13%
11%
11%
12CANARA BANK
Brought to you by Bsplindia.com
Duration of Investment Portfolio
4.4
4.6
4.8
5
5.2
5.4
Duration 4.75 4.88 5.2 5.4 5.25 5.3 5.16
Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03
13CANARA BANK
Brought to you by Bsplindia.com
Capital Adequacy Ratio
• The Capital Adequacy Ratio has reached a comfortable level of 13.27% in FY 2003 from 11.88% in FY 2002.
0
5
10
15
Tier II
Tier I
Tier II 3.81 4.65 4.18
Tier I 8.07 7.85 9.09
FY 02 FY 03 Sep-03
14CANARA BANK
Brought to you by Bsplindia.com
Earning Capacity
0
5
10
15
20
25
30
EPS(Annualized)
Sep-02
Sep-03
0
1
2
3
4
Sep-02 2.54 1.12 1.08
Sep-03 3.52 1.36 1.28
GP/AWF% NP/AWF% ROA%
• The Bank continued to sustain High levels of Earnings • Return on Assets at 1.28% compares well with that of peer banks.• Book Value of the Share has improved to Rs.112.33 from Rs.98.14 in March 2003
Rs.14.52
Rs.28.34
15CANARA BANK
Brought to you by Bsplindia.comBusiness Ratios -Cost of Deposits/ Borrowings
• The cost of Deposits has come down from 6.32% for FY 03 to 5.67% as at Sept- 03.• The Overall cost of Borrowing has come down from 11.19% for FY 03 to 8.5% as at Sept 2003.
0
5
10
15
FY 02 7.16 12.29
FY 03 6.32 11.19
Sep-03 5.67 8.5
Deposits Borrowings
16CANARA BANK
Brought to you by Bsplindia.com
Business Ratios – Yield%
• The yield on Advances has come down from 9.83% for FY 03 to 9.20% as at Sept 03.• The yield on Investments has come down from 9.99% for FY 03 to 9.04as at Sept 03.
0
2
4
6
8
10
12
FY 02 10.59 10.94
FY 03 9.83 9.99
Sep-03 9.2 9.04
ADV INVT
17CANARA BANK
Brought to you by Bsplindia.com
Income and Expense Analysis
0
5000
10000
Int Income 6371 6658 3286 3376
Int Expense 4550 4425 2208 2185
NII 1820 2233 1079 1191
Non Int Income 1428 1512 691 1209
Non Int Expense 1593 1748 822 904
FY 02 FY 03 Sep-02 Sep-03
THE NII HAS GROWN BY 23%IN FY 03 OVER FY 02
THE NII HAS GROWN BY 10%IN HY SEP 03 OVER HY SEP 02
THE CORE NON INTEREST INCOME HAS GROWN BY 19 %.
THE NON INTEREST INCOME OF RS.1209 CRORE AS AT SEPT 2003 INCLUDES RS.389 CRORE OF PROFIT ON ACCOUNT OF GOVT. BUY BACK OF GILTS
18CANARA BANK
Brought to you by Bsplindia.com
Earnings Analysis
Sep
2002
Sep 2003
Sep 2003**
Interest Income as a % of Total Income 83% 74% 80%
Other Income as a % of Total Income 17% 26% 20%
Net Interest Income as a % of Total Income 27% 26% 28%
Treasury Profit as a % of Other Income 47% 68% 52%
Treasury Profit as a % of Average Investments 1.22% 2.37% 1.24%
Fee Based Income as a % of Other Income 53% 32% 48%
** EXCLUDING RS.389 CRORE OF OTHER INCOME
19CANARA BANK
Brought to you by Bsplindia.com
Efficiency Ratios
0
10
20
30
40
50
Cost Income% 49 46.7 37.7
FY 02 FY 03 Sep-03
13
13.5
14
14.5
Staff Exp/ TotalIncome
14.4 14.2 13.6
FY 02 FY 03 Sep-03
20CANARA BANK
Brought to you by Bsplindia.com
Productivity ratios
Mar
2002
Mar 2003
Sep 2003
Business per Employee (Rs.Crore) 2.15 2.50 2.59
Business per Branch (Rs. Crore) 40.31 46.44 47.98
Gross Profit (Rs.Lakh) per Employee 3.46 4.19 3.32*
Staff Expenses (Rs.Lakh) per Employee 2.35 2.44 1.31*
Net Profit (Rs.Lakh) per Employee 1.55 2.14 1.29*
* Not Annualised
21CANARA BANK
Brought to you by Bsplindia.com
Retail Lending
Loans Outstanding Sep 2002 Sep 2003 Growth %
Housing Finance –Direct 1153 2005 74%
Retail Trade 1402 1980 41%
Other Personal Loans 1676 2384 42%
Total Retail Lending
- excluding Indirect Housing
4231 6369 51%
As a % of Net Credit 11.96% 15.57% -
Housing Finance –Indirect 789 1501 90%
Total as a % of Net Credit 14.19% 19.24% -
(Amount: Rs. Crore)
22CANARA BANK
Brought to you by Bsplindia.com
Retail Lending
Disbursements Sep 2002
Sep 2003
Growth %
Housing Finance –Direct 419 533 27%
Housing Finance –Indirect 87 577 563%
Retail Trade 344 365 6%
Other Personal Loans 673 724 8%
Total Retail Lending 1436 1622 13%
Aggregate Retail Lending including Indirect Housing
1523 2199 44%
(Amount: Rs. Crore)
23CANARA BANK
Brought to you by Bsplindia.com
Distribution of Branches -Deposits & Advances
Region Number of
Branches (%)
Aggregate
Deposits (%)
Aggregate
Advances (%)
Northern Region 12 24 24
Eastern & N. Eastern Region 10 08 07
Central Region 10 07 05
Western Region 10 19 24
Southern Region 58 40 40
As at 30.09.2003
• Well diversified credit portfolio with 12% in the Engineering industry, 11% in Petroleum, 9% in Infrastructure, 9% in Textiles and 7% in Iron & Steel.• Well balanced CD Ratio across the country.• CAGR of 20% in Credit book over last three years.
24CANARA BANK
Brought to you by Bsplindia.com
Deposit Mix
The Term Deposits have grown at an annualized rate of 9% over FY 03
The Current & Savings Deposits have grown at an annualized rate of 9% over FY 03
0
20000
40000
60000
80000
Term
SB
Current
Term 42371 46998 49127
SB 14511 17260 19115
Current 7148 7837 7154
FY 02 FY 03Sep-
03
25CANARA BANK
Brought to you by Bsplindia.com
Deposit Mix (%)
Aggregate Deposits increased from Rs.64030 Crore in FY 02 to Rs.75396 Crore in Sep-03.
Average cost of deposits declined from 7.16 in FY 2002 to 5.67% in HY ended Sep 2003
During FY 04, around RS.3500 Crore of high cost deposits would mature.
0
20
40
60
80
100
Term
SB
Current
Term 66 65 65
SB 23 24 25
Current 11 11 10
FY 02 FY 03Sep-
03
26CANARA BANK
Brought to you by Bsplindia.com
Credit Quality
FY 02 FY 03 Sep 02 Sep 03
Gross Advances 33966 41508.50 36655.42 42607.17
Gross NPA 2112 2474.78 2471.55 3026.48
Gross NPA Ratio (%) 6.22 5.96 6.74 7.10
Net Advances (Excluding Food Credit)
33127 40471.64 35528.45 40908.20
Net NPA 1288 1453.88 1364.57 1343.84
Net NPA Ratio (%) 3.89 3.59 3.84 3.28
(Amount: Rs. Crore)
27CANARA BANK
Brought to you by Bsplindia.com
Credit Quality
01
2
3
4
5
6
7
8
2002 2003 Sep-03
G. NPA %
Net NPA %
• Despite credit growth being higher than industry average, net NPA remained lower than industry average.• The Bank has been undertaking much higher levels of provisioning. Provisioning coverage, including Write-off, at 68.7% is reasonable by industry average.•Bank effected a Cash Recovery of Rs.228 Crore during HY Sep 03 as against Rs.204 during the corresponding period of FY 2003.
28CANARA BANK
Brought to you by Bsplindia.com
Focus on Subsidiaries & Sponsored Institutions
The Subsidiaries and Sponsored Institutions with focus on identified niche business areas have yielded good results.
Gilt Securities Trading Company, a Primary Dealer in Government Securities Market recorded a Turnover Exceeding Rs.45000 Crore in FY 03.
Canfin Homes Ltd, sponsored by the Bank has created a niche in Retail Home Financing by assisting more than 90000 families with Cumulative Sanctions of Rs. 2767.88 Crore and Cumulative Disbursements of Rs.2374.43 Crore.
Canbank Factors Ltd is Numero Uno in the Indian Factoring Business with ISO Certification.
CIMS is managing more than Rs.1600 Crore net assets. CCSL, the ISO Certified Software outfit is the only Public Sector IT Company. Aadequate provisions are being made to take care of all future obligations of
Canfina and all the commitments towards the PSUs with which settlement is reached is being met promptly.
29CANARA BANK
Brought to you by Bsplindia.com
Technology matters
Strategic Direction Computerization
Computer Policy and Planning Department to monitor IT activities as per the IT Plan drawn up by the Board
The Bank has designated The Indian Institute of Science, Bangalore, as consultant to implement various IT initiatives
The Bank is in preparedness to implement RTGS and has designated 191 branches for SFMS implementation.
1,910 branches computerized 1039 fully computerized 871 partially computerized
87.73% of the Bank’s business computerized
All Circle Offices, the Head Office and most Regional Offices inter-connected through INFINET
615 branches brought under Corporate Network
30CANARA BANK
Brought to you by Bsplindia.com
Technology matters
Technology-Enabled Delivery Channels and Services
Anywhere Banking implemented in 383 branches across 19 cities. 253 Networked ATMs, 28 ATMs under Shared Payment Network
System (SPNS) and 1 standalone – SWADHAN and SWITCH connectivity to 253 branches
Provision of Televoice Banking in 71 branches The Bank has recently launched Mobile Banking, Internet Banking
and Debit Card. Corporate Cash Management Services (CCMS) implemented in
198 Operating Centres and 706 pooling branches