Canara Bank hits two and half year low

The stock underperformed the market, falling 13% post Q1 earnings as compared to 5.4% rise in benchmark Sensex and 1% gain in Bankex

Canara Bank is trading lower by 4% at Rs 345 on back of huge volumes. A combined 585,619 shares have already changed hands on the counter till early noon deals, against an average sub 500,000 shares that were traded daily in past two weeks.

The stock opened at Rs 358 and hit a low of Rs 340, its lowest level since November 2009 on the National Stock Exchange.

The stock of state-own lender has underperformed the market, falling 13% post announcement of June quarter results on July 24, as compared to 5.4% rise in benchmark Sensex and 1% gain in banking sector index Bankex.

The bank has reported a lower than expected 6.8% year-on-year growth in net profit at Rs 780 crore, and 2.8% rise in net interest income (NII) for the quarter ended June 2012. Net interest margin (NIM) declined 10 basis points (bps) at 2.4% on quarter-on-quarter basis primarily driven by sequential drop in the yields and rise in cost of funds.

“The falling share of high yielding small and medium enterprise (SME) and retail loans,  over 100bps decline in current account, savings account (CASA) and higher bulk deposit at around 40% led to further contraction in NIM’s,” analyst at Emkay Global Financial Services said in its recent report.