Fundamental Analysis of Canara Bank
Fundamental Analysis of Canara Bank: The bank is on its way to bring innovation by reaching out to rural India and facilitating the financial future for millions of Indians. Strategic reforms and relaxed regulations by the Government of India (GOI) are encouraging people to avail the benefits of banking services.
One of the companies benefiting from these reforms is Canara Bank. In this article, we will perform a fundamental analysis of Canara Bank and try to understand its future potential. Read on to find out more.
Fundamental Analysis of Canara Bank – Company Overview
canara bank It is one of the leading companies engaged in banking business and has a leading position in the country. In 1906 in Mangalore, a visionary named Shri Ammembal Subba Rao Pai established Canara Bank in the state of Karnataka. The bank went through several stages of change to get to where it is today.
Accordingly, Canara Bank was nationalized in 1969, giving it a national position and wider reach. The bank has a long experience serving its customers and celebrated its 100th anniversary in 2006. Canara Bank was the first to launch an inter-city ATM network and also the first to obtain ISO certification.
The bank has commissioned a dedicated banking branch for Mahila called Mahila Banking Branch. It was the first to provide credit card issuance and agricultural consulting services to farmers. Now we have gone through the fundamental analysis of Canara Bank to get a basic idea about the company.
segment analysis
Rdetailed division: This is one of the banking’s push areas for segmentation, which includes housing, vehicles, education and other personal. The loans provided by each sector are listed in the table below.
agricultural sector: The bank focuses on delivering credit to the agricultural sector. $21,156.2 billion was disbursed under the agriculture portfolio, which includes over 1.23 billion accounts.
Micro, Small and Medium Enterprises (MSME): This is another important sector that banks serve by providing loans. The MSME sector is also one of the priorities, reaching approximately ₹1,23,627 Crores in FY 2023, an increase of 3.87% over the previous year.
Industry Overview
India remains a major bright spot as a country due to the revival of key sectors, including manufacturing and other investment activities. According to IMF projections, India is expected to grow at 5.9% and remains the world’s fastest-growing economy.
The Reserve Bank of India (RBI) has also released projections on India’s economic growth, with estimates showing 6.5 per cent growth in fiscal 2023-24, higher than the IMP projection.
In terms of inflation outlook, India remains at a moderate level of 5.2% for fiscal 2023-24, which is relatively good compared to the previous fiscal. These aspects are very important to look at when talking about the banking sector.
With the support from the government and the steps taken by the RBI, India has a positive outlook with sufficient capital buffers on the one hand and improved asset quality on the other, leading to robust credit growth. Canara Bank’s fundamental analysis has outlined various other information about the industry and its sectors.
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Fundamental Analysis of Canara Bank – Finance
Net profit and net profit
As shown in the financial statements, Canara Bank’s net interest income increased from ₹26,384crores in FY 2022 to ₹31,435crores in FY2023, registering a year-on-year growth of 19.14%. Meanwhile, the net profit available to shareholders was KRW 1,060.4 billion in fiscal 2023, an 86.76% increase compared to KRW 567.8 billion the previous year.
profit
Canara Bank’s net interest margin has been stagnant over the past three years, ranging between 2.12% in FY21 and 2.38% in FY23. However, net profit is increasing every year from 3.84% in FY21 to 12.58% in FY23.
rate of return
Canara Bank achieved a return on equity of 15 per cent for its equity shareholders in fiscal 2023, which was 6 per cent higher than 9 per cent in the previous fiscal year 2022. As of 2023, the return on assets (ROA) is 0.81%. The three-year return on equity is 10.82%.
Non-performing assets (NPAs)
Non-performing assets (NPAs) are one of the major challenges for all banks. Looking at Canara Bank’s quarterly reports, we see that the value of non-performing assets is gradually decreasing over a period of time, which is again a good sign for the bank.
Here in Canara Bank’s fundamental analysis financials, we have checked its net interest income, profit margin, yield and non-performing assets.
The table below shows the NPA ratio for the last five years.
Canara Bank Fundamental Analysis – Key Indicators
Fundamental Analysis of Canara Bank – Future Plans
- Canara Bank is in a fast-track process to launch new updated services that offer an end-to-end digital lending system considered a new-age practice.
- To keep customer service up to date and of the highest quality, banks are introducing options at ATMs that allow customers to provide feedback.
- Another great move by the bank is the introduction of UPI International Acquirer, which allows customers to make payments from countries identified by the National Payments Corporation of India (NPCI).
- The bank is also offering its services by introducing UPI Lite Acquirer, a wallet that allows payments (small amounts) up to Rs.200 even in offline mode, which is very useful in the absence of Core Banking System (CBS).
- Cheggout integration, a new feature coming to the ai1 app, is another amazing feature that provides comparison and shopping capabilities, which are useful as they provide personalized offers to sellers.
conclusion
After looking at the industry overview, operations, fundamentals, and most importantly plans, we have come to the end of Canara Bank’s fundamental analysis. Banks that are nationalized will receive support from the Government of India and the Reserve Bank of India (RBI).
The risks and opportunities faced by banks especially in the Indian market should be analyzed to know more. Please leave your views and thoughts in the comments section below.
Written by Nishanth P
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