Canara Bank - Q4 2010

Strengths

High performance financially.

Comfortable capital adequacy ratio.

Weaknesses

Potential for political interference.

Limited presence in western region.

Opportunities

Drive to increase its overseas presence.

The bank may expand into western India.

The bank has been one of the fastest to increase infrastructure lending in recent years, ahead of it rivals.

Threats

The gradual entry of foreign banks, operating more fully, from 2009.

The global economy is expected to remain in recession at least until 2010.

Company Overview

Canara Bank, based in Bangalore, is India's 11 th largest bank in terms of market capitalisation. It was founded in 1906 and nationalised in 1969. It has nine subsidiaries, sponsored institutions and joint ventures in India and abroad. The bank has over 3,000 branches and more than 2,000 ATMs. Of these branches, 1,362 have internet and mobile banking services and 2,062 offer Anywhere Banking services. All of its branches offer real time gross settlement and national electronic funds transfer facilities.

Canara increased its lending in the infrastructure sector in 2009, rising by 59% y-o-y in July-August 2009 compared. The bank is expected to continue increasing its project financing, which tends to bring stable, albeit relatively low, returns.

Canara expanded its insurance operation, a joint venture with Oriental Bank of Commerce (OBC) and HSBC, to rural populations in Uttar Pradesh and Karnataka. The expansion in December 2009 includes the joint venture collaborating with rural banks Shreyas Gramin Bank and Pragathi Gramin Bank, accessing their customer base through a combined network of around 550 branches.

The bank established 283 new branches in 2009, with the majority opening in Q4. Nonetheless, the bank has a limited presence in western India, where it intends to expand in the near future, possibly through a series of acquisitions.

It has identified 21 locations where it wishes to expand globally. Canara has obtained approval from the RBI to open branches or offices in Johannesburg, Frankfurt, Muscat, Manama, Qatar Financial Centre, Leicester, New York, São Paulo, Dar es Salaam and Tokyo.