Canara Bank is planning a Rs 250 crore initial public offering in the next financial year. The bank expects to collect 'reasonable' premium from the investors.
"We are waiting for the capital markets to recover. Since we expect the bank's earnings per share (EPS) to be about Rs 10 in the current fiscal, the float deserves a premium. However, the extent of premium depends on the market's appetite during that time and we want to reward the investors by charging less premium than what the offer deserves," R V Shastri, the bank's chairman and managing director, said.
The bank, instead of opting for a 25 per cent divestment of government's stake might be allowed to unload 49 per cent, Shastri hinted.
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Canara Bank's present paid-up equity is about Rs 570 crore. The bank currently has a capital adequacy ratio of 11.04 per cent and posted an EPS of Rs 4.89 for the year ended March.
The bank is confident of posting a performance that would better peers in the current financial year.
It has posted a net profit of Rs 306 crore for the half year ended September, while profit for the year ended March 31, 2001, stood at Rs 235 crore.
Our treasury operations in the secondary market are buoyant in the recent times with wild fluctuations in the bond market, Shastri said.
It has a Rs 25,000 crore treasury portfolio, which is actively churned in and out by its subsidiary, CanGuilt. The bank has drawn up a plan for Rs 50 crore investment on technology in the next two years. It is planning to increase the number of totally automated branches to 1500 by March from the existing 1,085.
It plans to add another 400 branches in the next fiscal, which will take the total number of automated branches to 1,900 out of bank's total 2,000 branches.
On the information technology side, the bank plans to network all its metropolitan branches by March in order to facilitate anywhere banking and electronic fund transfers.
It expects to network branches in the main cities such as Ahmedabad, Bangalore and Hyderabad by June. The Other major centers will be covered in the next phase.
The bank has so far installed 34 automated teller machines and is planning to increase the number to 100 by March.
The bank has also taken up a major recovery drive in the last fiscal, which has made possible a Rs 405 crore cash recovery and brought down the gross non performing assets (NPAs) to Rs 2,400 crore (8 per cent) and the net NPAs to Rs 1,400 crore (4.9 per cent) level.
"With more debt recovery tribunals expected to be set up and the legal machinery to be strengthened by the regulators, we expect the NPAs to come down further," Shastri hoped.