Why Canara Bank Share Price is Rising

PSU banks' stocks were under pressure last week due to the impact of RBI's draft circular proposing tighter guidelines on project financing.

The circular continues to have an impact on most PSU bank stocks as most of them continue to trade under pressure.

However, yesterday, the fate of one PSU bank stock changed as Canara Bank share price rallied 5% yesterday.

So, what was new for Canara Bank?

Find out...

Stock Split Effect

In February 2024, the board of Canara Bank approved the sub-division of its equity shares in the ratio of 1:5.

Each share of the company with a face value of Rs 10 was split into five shares with a face value of Rs 2.

Yesterday, finally the effect of the stock split was incorporated on the bourses.

The company's share price was adjusted in the stock split ratio, and the shares became more affordable to retail investors, which drew investor attention.

Even before the stock split, Canara Bank's share price was on a steady rise. Its share price hit a 52-week high on 3 May 2024 due to the following reasons:

Good Financial Results

In the quarterly results, Canara Bank's net profit stood at an all-time high of Rs 37.5 billion (bn), up by more than 18% compared to the corresponding period last year.

This rise in net profit was driven by a considerable rise in income and a significant drop in provisions.

The bank's other income increased by 9% which also boosted the company's profit. Other income increased to Rs 52.2 bn from Rs 47.8 bn a year ago.

The net interest margin (NIM) of the bank improved to 3.1% from 3% a year ago mainly as the bank compensated the higher cost of funding with increased lending rates.

The bank's asset quality also improved as the total provisions dropped by 20% compared to last year. The gross NPA ratio reduced to 4.2% in March 2024 from 5.4% a year ago.

Total advances of the company in the quarter increased by 11%, led by a 12% growth in retail loans and a 19% expansion in the financing of agricultural and allied activities.

Strong Growth Prospects

The company is actively focusing on improving its NIM. To do so the management is working on reducing costs while mainting asset quality.

Recently, the entire bank has focused on CASA by introducing new products, new platforms, new features, and new initiatives to reach new customers as well as increasing deposits from the existing customers.

The management aims to continue this tempo of introducing new products and initiatives, technology-related initiatives, making the customer journey more comfortable.

The management expects to deliver 11-12% loan growth in the current financial year.

Hence, the growth prospects of the company look promising. However, investors should keep in mind that these are just prospects and expectations that may or may not turn into reality.

How Canara Bank Share Price has Performed Recently

In the past month, Canara Bank's share price slipped 2%.

The share price went up 40% in the past 6 months and around 86% in the past year.

The stock touched its 52-week high of Rs 126.5 on 3 May 2024 and a 52-week low of Rs 58.3 on 19 May 2023.

About Canara Bank

Canara Bank was incorporated in 1906 and nationalised in 1969, along with 13 other major commercial banks of India, by the government of India.

The bank is headquartered in Bangalore and was merged with erstwhile Syndicate Bank in April 2020.

The bank has a market share of 6.2% and 6.5% in net advances and total deposits with the government of India holding a majority stake (62.93% as on 30 September 2023).

It had a network of 9,518 domestic branches and 10,553 ATMs as on 30 September 2023.

Its segments include treasury operations, retail banking operations, wholesale banking operations and other banking operations.

For more details about the company, you can have a look at Canara Bank's fact sheet and Canara Bank's quarterly results on our website.

For a sector overview, you can read our banking sector report.

You can also compare Canara Bank with its peers on our website:

Canara Bank vs SBI

Canara Bank vs Union Bank

Canara Bank vs Indian Bank

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...