Corporation Bank Disappoints On Quarterly Results

Corporation Bank announced its Q3FY14 financial results, posting a net profit of Rs 126.69 crore for the quarter ended December 31, 2013, down by 58.21% compared to that of Rs 303.17 crore for the corresponding quarter in the previous year. 

As regards its operational performance, the bank posted a Net Interest Income (NII) of Rs 1001.61 crore, up 10.08 % Q-o-Q from Rs 909.87 crore in Q2FY14.The bank’s other income fell by 0.32% to touch Rs 338.59 crore in Q3FY14 from Rs 386.96 crore in Q3FY13.

On the provisions and contingencies front, there was a sharp elevation of 125.78% on YoY basis and which grew to Rs 916.81 crore during the quarter ending December 2013 from Rs 406.06 crore in the corresponding quarter last year. 

Its gross Non-Performing Assets (NPA) improved to 3.08% during the quarter from 3.17 % in Q2FY14 and 2.18% in the corresponding quarter last year. In absolute term, the Gross NPAs decreased by 0.92% on a quarterly basis and increases 68.30% on a yearly basis to Rs 3844.2 crore. The Net NPAs also decline by 54 bps on a sequential basis to 2.15% and in absolute terms it is up by 56.32% on a quarterly basis to Rs 2653.62 crore. 

We believe that, as slower growth and sluggish recovery, Q3FY14 was moderate in operating performance and asset quality. We expected NPA pressures to remain at elevated level for next quarter too. However, strong efforts to recovery by banks could improve the recoveries which could make some difference to the asset quality. Overall we believe Corporation Bank to continue to report reasonable quality of earnings in the coming months. We advise investors to trade cautiously in the counter.