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IPO: Canara Bank bets on financial strength

By Our Corporate Reporter

CHENNAI NOV. 14. Canara Bank had a consistent track record of profitability since inception and in the year ended March 2002, the performance of the bank was impressive with an increase in interest income, quantum rise in non-interest income and savings in operating costs, according to R. V. Shastri, chairman and managing director of the bank.

Addressing presspersons here today, in connection with the initial public offering (IPO) of the bank, Mr. Shastri said the IPO at a price of Rs. 35 per share was offered to the public at a discount of 58.4 per cent to the net asset value (NAV). Post IPO, the NAV would increase to Rs. 84.14 from Rs. 57.84 as on March 31, 2002.

Further, the earnings per share would increase to Rs. 18.08 after the IPO from Rs. 12.83 as on March 31, 2002, he said. The financial strength of the bank lay in its hidden reserves of over Rs. 2,700 crores built up over a period.

Apart from the business growth, any improvement in recovery from non-performing assets would contribute significantly to the performance of the bank, Mr. Shastri said.

Though the increase in profitability of banks in general was due to treasury operations, due to a fall in interest rates resulting in the appreciation of value of securities in the secondary market last year, Mr. Shastri said the continued deepening process of the securities market itself would help banks in shoring up revenues from trading in securities.

With a number of corporates accessing the bond market instead of equity market to raise resources, he hoped the retail market for debt would improve.

Judging by the response from many centres to the public issue campaign, Mr. Shastri hoped the IPO, which opens for public subscription from November 18 to 27, would be well received.

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