W15624

CANARA BANK TURNAROUND

Professors R. R. Sharma and Deepak Tandon wrote this case solely to provide material for class discussion. The authors do not
intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names
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Copyright © 2016, Richard Ivey School of Business Foundation Version: 2016-01-11

On May 5, 2014, Rajiv Kishore Dubey, chairman and managing director of Canara Bank, was getting
ready for a presentation of the bank’s results for the financial year (FY) 2013/14. The main conference
hall at Canara Bank’s Bangalore headquarters was packed to capacity with media people, both print and
electronic. As the presentation kicked off, the media, who were expecting another routine performance by
the public sector giant, swung into action, clicking photographs and firing out question after question on
how Canara Bank had outperformed the industry beyond everyone’s wildest expectations in a particularly
difficult year for the Indian economy. Now Dubey was talking about a projected business level of ₹8,500
billion,1 a wider global footprint, increasing branch strength to 6,000 and automated teller machines
(ATMs) to 10,000, and opening 10 more zonal offices in India by March 2015. For the more than 100
media people present, the burning questions were: “How was this turnaround possible in just 15 months?
Can the bank continue this growth next year as well?”

Dubey had several key concerns. Could Canara Bank, a 108-year-old public sector, ₹7,200 billion
business, launch such an ambitious expansion program based solely on encouraging results from fiscal
year (FY) 2013/14? Was the management committee’s optimism justified given that several new
initiatives were still at various stages of implementation, such as the newly embedded retail culture and
the massive recruitment drive? Would these initiatives overstretch the bank’s constrained resources,
which were already affected by a reduced net interest margin? The growing capital needs of the bank
involved tough policy decisions such as lowering the government share or raising capital from the market.
Would all stakeholders support the firm’s ambitious goal, especially since the economy was showing
growth below 5 per cent?

However, at the same time, Dubey was keenly aware that to regain its number one position among Indian
public sector banks and improve reach and profitability in a highly competitive market, an expansion
program of this magnitude had to be launched or else an opportunity would be missed. This made the
decision even more critical.

1
₹=INR=Indian rupees; CA$1 = ₹54.87 as of May 5, 2014.

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INDIAN BANKING INDUSTRY

The Indian banking sector, valued at ₹77 trillion, had emerged as one of the strongest drivers of India’s
economic growth. Banks made considerable progress in the wake of the financial sector reforms of 1991,
so that by the start of the 21st century, the sector was on the brink of an invisible revolution. Deregulation
opened new doors for banks to increase their revenue by diversifying into non-traditional activities such
as investment banking, insurance, credit cards, mortgage loans and securitization. In line with
liberalization, competition increased both within the banking sector and in other segments such as mutual
funds, non-banking finance companies, post offices and capital markets. Most banks started offering their
clients a suite of services such as mobile banking, text message banking, Internet banking, ATMs and
allied e-commerce products.

Indian banks, the most dominant financial intermediaries in India, had made mixed progress over the past
five years; this was evident from several factors, including annual credit growth, profitability and trends
in gross non-performing assets (NPAs). While the annual rate of credit growth had reached 23 per cent,
profitability (average return on net worth) was maintained at around 15 per cent. Against a backdrop of
gross domestic product (GDP) growth deceleration, weak industrial growth data and persistent inflation
during FY 2013/14, Indian banks had become more risk-averse with regard to lending. The deceleration
was observed across all bank groups and was particularly high in public sector banks and private banks,
which jointly accounted for 90 per cent of India’s entire bank credit.2

EMERGING CHALLENGES AND OPPORTUNITIES

Against the backdrop of a highly competitive and market-oriented banking system, the key issues faced
by Indian banks were as follows:

 As per regulatory requirements, Indian banks needed to shore up their capital base to adhere to the
existing Basel III norms. With public sector banks falling short of the target, a consistent annual
equity infusion of ₹160 billion to ₹180 billion was expected to flow from the government over the
next five years. This was the major challenge for Indian banks.
 The asset quality of Indian banks on account of moderation in the GDP, industrial growth, and
corporate profitability was the second major challenge. Sectors such as iron and steel, textiles, power
generation, automobiles and ancillaries, telecommunications, aviation, construction, real estate, and
infrastructure were grappling with a number of issues, such as delays in approval from the
government, slowing investments, environmental clearances, land acquisition, the availability of coal
and redundant labour laws. As a result, the asset quality of Indian banks had taken a hit. This was
reflected by the gross NPAs of scheduled commercial banks, which had reached a level of 4 per cent
in March 2014, up from 3.4 per cent in the previous year.3
 The third major challenge was extending the banking sector’s reach. Only 40 per cent of the Indian
population had access to formal banking channels. To address this issue, rapid growth in branch
networks and a faster rate of technology adoption were needed. However, this might lead to a fall in
profitability in the short run, resulting in lower net interest margins.
 Human resource management in banks, which employed around one million people, was another
major challenge, all the more so because new international capital norms required a high level of
sophistication in terms of risk management, information systems and technology. Banks needed to

2
Reserve Bank of India, https://www.rbi.org.in/, accessed July 16, 2014.
3
Ibid.

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attract a talented workforce, train them appropriately and adapt their existing human resources to the
changing global market environment.
 At the same time, the Indian demographic dividend presented vast opportunities for banking, with the
retail and small and medium enterprise (SME) segments offering tremendous growth potential for the
sector. However, while mortgage loans were estimated to reach around ₹4 trillion by 2020,4 the SME
segment was very demanding, requiring innovative products at narrow margins.
 Infrastructure lending was another potentially significant opportunity for Indian banks, with a
projected book size of around ₹4.5 trillion by 2020.5 This required a much higher capital base and a
different mix of resources for asset-liability matching.

In the face of this demanding environment, banks had to learn to maintain narrow margins and deal with
fierce competition, with non-interest income forming a large source of their income. Under such
circumstances, the management of wealth and investments offered a tremendous business opportunity. In
this context, product innovation and service delivery enabled competing banks to remain at the leading edge.

MARKET LANDSCAPE

As of March 2013, the Indian banking sector accounted for 79.4 per cent of India’s gross national product
(GNP). The sector witnessed a year-on-year growth of approximately 116 per cent between 2008 and
2013, with an accrual of ₹35,545 billion in deposits and ₹28,985 billion in credit. In addition, 31,024 bank
branches and 79,467 ATMs were introduced (see Exhibit 1).6

CANARA BANK ORGANIZATION

Canara Bank was founded in 1906 in Mangalore, a small port town in Karnataka, India. Over the more
than 100 years since then, the bank had experienced many different growth phases. Particularly after its
nationalization in 1969, its growth was phenomenal, cementing its status as a national player in terms of
geographical reach and client segments. Canara Bank occupied a position among the top five public
sector banks in the country (see Exhibit 2). Over the years, the bank had been scaling up its market
position to emerge as a major financial conglomerate, with a total of nine subsidiaries and joint ventures
in India and abroad (see Exhibit 3).

During the four-year period of March 2010 to March 2014, Canara Bank’s business rose by ₹3,178 billion
and exceeded the ₹7 trillion mark to reach ₹7.22 trillion. In terms of deposits, the bank accrued ₹1,861
billion, taking total deposits to a level of ₹4.21 trillion. Similarly, in the case of advances, the bank brought
in ₹1,317 billion, taking total advances to ₹3.01 trillion. Significantly, 39 per cent of the accretion in the
bank’s business during these four years (that is, 35 per cent in deposits and 45 per cent in advances)
happened during FY 2013/14. During the same period, the bank expanded its network by adding 1,027
branches and 2,786 ATMs, taking the total number of branches to 4,755 and ATMs to 6,312. This was more
than the combined growth of branches and ATMs during the previous four years. The bank continued
investing in delivery channels, information technology (IT) infrastructure, business process reengineering,
innovative products and services, and building staff competencies in order to improve its competitive
position. At that time, the bank catered to more than 55 million customers (see Exhibits 4 and 5).

4
Ibid.
5
Ibid.
6
Ibid.

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Canara Bank was the market leader in India in March 2010. However, subsequent years witnessed the
emergence of Punjab National Bank, the Bank of Baroda and the Bank of India as strong contenders for
that title. All of these banks had certain features in common: a large number of outlets, a strong global
branch network, a predominantly retail business mix and a large base of low-cost deposits. As a priority,
they targeted the “price-sensitive” Indian customer in the retail space and introduced several value-added
services aimed at the emerging tech-savvy middle class. At the same time, Canara Bank was becoming
risk-averse and was growing mainly through wholesale banking, resulting in high-cost deposits and a low
yield in advances — and thus lower profitability.

New private sector banks, such as HDFC Bank, ICICI Bank and Axis Bank, also saw solid growth during
this period — so much so that old private sector banks were obliged to take notice of these new entrants
grabbing their market share. From 2012 to 2014, IT products such as mobile and Internet banking, ATMs, e-
payments and plastic cards also caught the fancy of customers. All banks were competing in this IT
segment, which was gaining substantially year on year. Significantly, Canara Bank did not gain enough
traction in this phenomenal growth story due to a lack of focus, unattractive product features, low branch
network coverage in centres with potential, poor marketing focus and uncompetitive pricing.

As a result, low-cost deposit shares at the bank nose-dived and were replaced by high-cost bulk deposits.
Similarly, growth under credit was centred on short-term loans and bulk credit at the expense of retail
banking. Hitherto loyal clients had started switching over to other banks due to delays in decision-
making. In summary, when Dubey became chairman and managing director in January 2013, Canara
Bank was fast losing its direction, market share and strategic focus.

CANARA BANK CHANGES TRACK

Although Dubey had prior experience as executive director of the Central Bank of India, his new position
was a far larger proposition involving multiple issues. Immediately, Dubey announced the third-quarter
results for FY 2013 at a board meeting in Bangalore, amid loudly expressed complaints by board
members and analysts over declining profits and the rise in NPAs. In response, he presented a roadmap
for the bank to the board of directors and assured them that the results would show considerable
improvement from the fourth quarter onwards. Dubey had a strong market reputation as a successful
banker, game changer and decisive leader, but confronting him was a century-old ₹5 trillion public sector
bank with complex issues and stakeholders demanding a quick turnaround. The aircraft would have to be
repaired while still in flight. Sitting in his corner office at Canara Bank headquarters, Dubey reflected:

I am proud and privileged to be a part of this great institution, which has more than a century-old
history and strong founding principles. Canara Bank has been widely known in the industry as a
trendsetter and an institution to reckon with. In recent times, however, we have fallen back from
our strong position. From being a leader in advances a few years ago, our growth has dropped to
half the industry rate. Such challenges are neither unusual nor insurmountable. The present
situation necessitates a sharper focus on our emergence as a strong retail bank. The bank needs to
respond quickly to opportunities and threats.

Key Challenges for Canara Bank

Dubey called on all the bank’s general managers to present their action plans. As the presentations
progressed, he became convinced that Canara Bank was a fundamentally strong organization with a
dedicated workforce. All that was missing was direction and motivation.

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Challenge: Increasing the Share of Retail Banking

Options for Term Deposits

The presentations revealed that half of Canara Bank’s deposits were high-cost bulk deposits. This
presented the first challenge. All field functionaries were focusing on high-cost institutional deposits as a
shortcut to achieving business goals, albeit at considerable expense to the retail customer. The interest
cost of high-cost deposits was 10 per cent or more compared to the retail deposit cost of 9 per cent. The
Government of India had already instructed all public sector banks to reduce high-cost bulk deposits to 10
per cent and bulk deposits, as well as certificates of deposit (CDs), to 15.3 per cent in total deposits.

Canara Bank responded to this by deciding that no high-cost preferential deposits were to be accepted and
targets for operations would consist of retail deposits only. There was apprehension that this would result
in a loss of ₹500 billion in deposits, which might not be replenished by retail deposits. However, Dubey
was willing to take that chance. Interest rates on retail deposits were aligned and the new rates ended up
being one of the best in the entire banking industry.

The results were unbelievable. The bank’s share of high-cost bulk deposits and CDs in total deposits,
which was 44.75 per cent in March 2012, dropped to 15 per cent by March 2014.

Options for Low-cost CASA Deposits

Dubey explained the need to build up a strong base of low-cost current and savings account (CASA)
deposits as follows:

Our CASA deposits at 25 per cent are the lowest and well below the industry average of 34 per
cent. There is no growth in current deposits. Our pace of growth in savings has to be trebled.
There is an urgent need to focus on stable CASA deposits, pension accounts, rural savings
deposits, government business and new current accounts from small and medium business
concerns to increase our CASA base.

As part of its nationwide strategy, Canara Bank simultaneously kicked off a massive publicity campaign
coinciding with all of the above initiatives. In addition, it enhanced its visibility for retail products at
major airports, railway stations and business centres countrywide using airport trolleys, billboards and
media advertisements.

Challenge: Focus on Retail Credit

The bank had been registering negative growth in retail loans for the previous two years. During that
period, no new products were launched, interest rates were not in sync with the market, and the delivery
of products was slow and time-consuming in a highly competitive environment. Dubey and his senior
management team were committed to the bank’s new strategy. If the focus was on CASA and retail term
deposits on the liability side, it was squarely on retail and SME loans on the asset side.

The bank believed that its strategic direction would allow it to sustain growth through continuous
development of its brand image, launching innovative products and increasing its presence in various
locations. In short, Canara Bank was once again in pursuit of growth and was continuously on the lookout

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for new opportunities in the domestic and international retail business, new partnerships and future
growth in terms of its mortgage business.

Options

Canara Bank debated different strategies for increasing retail credit. It particularly liked the idea of
partnering with builders and vehicle manufacturing companies to build up portfolios in home and vehicle
loans, the two most prominent segments in the retail credit market.

Another option was to develop innovative retail products to keep up with the competition. Organizing
countrywide retail expos in order to bring vendors, customers, builders, car dealers and educational
institutions together under one roof was another option. However, ground-level organization was a
concern, since these initiatives were new experiments and managers were possibly not conversant with
corporate expectations or did not have full access to vendors and other data.

Yet another option was to change the service delivery mechanism through specialized retail outlets. In
that regard, Canara Bank had two options for enhancing the retail credit delivery process: strengthening
branch-level delivery mechanisms or reorganizing specialized retail focus outlets called “retail asset
hubs.” The bank did both.

Canara Bank identified 100 retail focus branches with the potential for retail lending in the amount of
₹100 million to ₹500 million a year. All branches were given a facelift and provided with talented front-
line staff and marketing officers, who were well trained in handling retail products. The bank
redistributed power to branches and ensured that 90 per cent of corporate decisions were made at the field
level. This reduced the response time from 30 days to a mere five and greatly boosted employee morale.

The bank’s last option involved engaging its competitors in a price war, but that would affect the bottom
line unless retail volumes were scaled up to occupy at least 15 to 20 per cent of its credit portfolio. Dubey
decided to go for competitive price leadership by offering retail loans at the most competitive interest
rates with no service charges during the campaign period. This appealed to the price-sensitive Indian
customer in a big way.

All of these initiatives combined to turn Canara Bank around and make it one of the fastest growing retail
banks by FY 2014 (see Exhibit 6).

Brand Image: Trust and Dependability

Canara Bank was originally one of the most prestigious bank brands in southern India. Further, the bank had
a strong pan-Indian presence with a reputation for customer orientation and innovative products. The retail
team was relying heavily on the trust that Canara Bank’s 50 million or more customers had placed in it over
a long period of time. The marketing team knew that customers would continue to buy the bank’s retail
products if they were competitively priced, with convenient delivery times and attractive features.
However, the 40 plus retail expos organized in all state capitals and prominent cities were the game
changer. A typical retail expo boasted 30 to 40 builders, 25 car and motorcycle dealers, 10 educational
institutions, and 20 stalls featuring local craftsmen, electronic items and food outlets. Typically, 3,000 to
4,000 customers visited the stalls, made purchase decisions and obtained spot loan approvals from bank
officials. Dubey himself visited many of these expos across India despite his tight schedule, and this
created lots of focus and publicity for the bank.

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Product Design

Another aspect that set Canara Bank apart from its competitors was its product innovation. Retail
products had to be easy to use, competitively priced and designed to meet the diverse needs of customers.
As Dubey said, “It was paramount that Canara Bank retail products should be customer-centric. They
should be a class apart from the competition, whether product features, price or delivery.”

Within a year, Canara Bank had launched new home loan products for high-net-worth individuals, non-
resident Indians (NRIs) and agriculturists. It also introduced “Home Loan Plus” (a value addition to home
loans), mortgage loans for entrepreneurs, and “Canara Unnati” and “Canara Pragati” for small-scale
enterprises. Most of these products were instant hits.

Price

In determining pricing for its retail products, Canara Bank placed a heavy emphasis on competitiveness. It
launched a “festival dhamaka” for four months, during which processing charges were waived. Dubey
explained the bank’s low pricing strategy to the bank’s asset management committee: “Retail is a volume
game. To gain the market share, you need to offer the best price and gain in volumes.”

Employees

Canara Bank provided a great deal of training to its front-line employees to enable them to talk
knowledgeably about the different features of the bank’s products, as well as those of its competitors.
Developing banking knowledge and service expertise demanded considerable effort from employees. To
keep them motivated, the bank launched various campaigns, announced cash awards and provided
prestigious foreign training to outstanding performers.

The bank recruited more than 9,100 employees during FY 2013/14, representing one of the biggest
recruitment drives ever in a public sector bank. Recruitment drives over the next five years, targeted at
hiring young talent, aimed at reducing the average age of the workforce to below 35 years by 2017.
Nevertheless, finding enough capable people to reflect the bank’s core values, customer orientation and
service delivery capacity remained a major challenge.

Technology Adoption

Young people in India were fascinated by the Internet, mobile communication devices and other
technological products, but the bank’s technology was rapidly becoming obsolete and being replaced by
new processes and innovations in the field. Dubey knew that if the bank was to attract the younger
generation, it would need to invest heavily in technology upgrades and product innovations. He told the
board of directors, “Technology expenditure is an investment for future growth. If we lag behind, we will
be missing great opportunities to be bankers to the young generation.” The board of directors agreed with
his statement, and the bank made technology its top priority. The bank focused on modifying its system
completely to introduce a customer-friendly approach. Joint teams from the technology department and
Infosys (the leading IT company in India) worked day and night to remove any hassles associated with
Internet and mobile banking.

The hard work paid off and encouraging results flowed from every direction. During 2013/14, the bank
gained 0.42 million new Internet banking business customers, 1.1 million mobile banking customers and

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5.5 million new debit cards. An online customer acquisition facility was launched for all banking
products. As a result, for instance, an NRI home loan seeker in New York could apply online and get
approval within three to five days.

Maintaining Healthy Asset Quality

Slow economic growth during the last two financial years had put pressure on asset quality across the
entire banking industry. Another significant and tough challenge for Canara Bank was to contain this
deterioration in asset quality. Dubey issued a call for real-time monitoring of asset quality and slippages
and ordered timely remedial steps to be taken, such as restructuring and upgrades. Innovative one-time
settlement schemes were launched for distressed MSMEs, education and other sectors. Compared to the
industry gross NPA ratio in excess of 4 per cent and a ratio in the range of 4 to 5 per cent for many of its
peers, the reduction of Canara Bank’s NPA ratio to 2.37 per cent (2.57 per cent) and its record cash
recovery of ₹549 billion by March 2014 surprised peers and earned the appreciation of the government.
The market took this as a positive sign and the price of the bank’s stock rose.

Financials

Canara Bank’s earnings per share and stock prices had been increasing over the last five years (see
Exhibit 4). The net interest margin, a measure of profitability, had been consistently above 2 per cent,
even though it had dropped from 2.8 per cent in March 2010, to 2.27 per cent. The cost of funds had
increased from 5.65 per cent to 6.8 per cent. However, the decline in fund costs in FY 2013/14 due to a
strategic shift to retail banking was noticeable. During that year, the share of retail deposits in total
deposits increased from 80 to 84.7 per cent.

The yield on funds had shown a steady growth from 8.1 per cent to 8.79 per cent in a highly competitive
arena, mainly due to an increase in retail and SME loans. Business per employee and profit per employee
were comparable to peer banks. A remarkable feature of Canara Bank was its asset management skills.
While the NPA level in the Indian banking industry was generally moving north (4 per cent as of March
2014), Canara Bank had been able to keep it to 2.8 per cent in a tough economic climate. This was due to
its prudent credit policies, strong credit monitoring skills and guidance from top management.

Could the bank maintain and even increase this momentum without alienating its customers and staff?
This was the dilemma Dubey faced as he met with the media and the board in the spring of 2014.

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EXHIBIT 1: STATISTICS RELATING TO COMMERCIAL BANKS IN INDIA

Indicators March March March March March March

2008 2009 2010 2011 2012 2013
Number of commercial banks* 173 170 167 167 173 155
Number of bank offices in India 78,787 82,897 88,203 94,019 102,377 109,811
Aggregate deposits of scheduled commercial banks
31,969 38,341 44,928 52,079 59,090 67,514
(₹ billion)
Bank credit of scheduled commercial banks
23,619 27,755 32,447 39,420 46,118 52,604
(₹ billion)
Deposit of scheduled commercial banks as % to
72.8 77.1 78.2 78.2 78.0 79.4
GNP at factor cost
Number of ATMs 34,547 43,651 51,765 76,871 95,686 114,014
*Number of bank offices includes administrative offices.
Source: Reserve Bank of India, “Statistical Tables Relating to Banks in India 2012-13,” 14, accessed July 17, 2014,
https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/0STR191113FL.pdf.

EXHIBIT 2: TOP 10 BANKS: PEER COMPARISON AS OF MARCH 31, 2014

Market Cap P/E (TTM) P/BV (TTM) EV/EBITDA ROE ROCE D/E
Bank
(₹ billion ) (x) (x) (x) (%) (%) (x)
State Bank of India 2015 18.44 1.7 15.19 10 0 0
Bank of Baroda 378 8.63 1.05 15.42 13.4 0 0
Punjab National Bank 354 10.63 0.99 14.98 10 0 0
Canara Bank 206 8.8 0.86 12.25 10.4 0 0
Bank of India 195 7.32 0.75 15.52 11.2 0 0
IDBI Bank 172 15.81 0.79 12.91 5.4 0 0
Union Bank (I) 143 8.76 0.85 13.17 10.4 0 0
UCO Bank 115 7.66 1.09 15.18 16.8 0 0
Syndicate Bank 109 6.64 1.01 15 16.7 0 0
Central Bank 106 0 0.86 14.96 0 0 0
Note: P/E (TTM): Price per share earnings (trailing 12 months) ratio
P/BV: Price to book value ratio
EV / EBITDA: Enterprise value to earnings before interest, taxes, depreciation and amortization ratio
ROE: Return on equity ratio
ROCE: Return on capital employed ratio
D/E: Debt to equity ratio
Source: Compiled by case authors based on India Infoline Research, “Canara Bank,” accessed July 7, 2014,
www.indiainfoline.com/Markets/ Company/Fundamentals/Profit-Loss/Canara-Bank/532483.

EXHIBIT 3: CANARA BANK’S SHAREHOLDING PATTERN

Source: Canara Bank, “Performance Highlights March 2014,” slide 48, accessed July 17, 2014,
www.canarabank.com/English/scripts/PressReleases.aspx.

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EXHIBIT 4: CANARA BANK: PROFIT AND LOSS, 2009 TO 2014 (₹ BILLION)

March March March March March March

Particulars
2014 2013 2012 2011 2010 2009
Income 0 0 0 0 0 0
Interest Earned 395 340 308 229 187 171
Other Income 39 32 29 28 28 24
Total 434 372 337 257 215 195
Expenditure
Interest Expended 306 261 231 152 130 124
Payments to/Provisions for
36 32 29 29 21 18
Employees
Operating Expenses &
12.5 10 9 8 7 6
Administrative Expenses
Depreciation 2.2 1 1 1 1 1
Other Expenses, Provisions &
46.5 28 24 15 15 18
Contingencies
Provision for Tax 6.2 8 8 10 8 5
Fringe Benefit tax 0 0 0 0 0 0
Deferred Tax 0 0 0 0 0 0
Total 410 343 304 217 185 174
Profit & Loss 0 0 0 0 0 0
Reported Net Profit 24 28 32 40 30 20
Extraordinary Items 0 0 0 0 0 0
Adjusted Net Profit 24 28 32 40 30 20
Prior Year Adjustments 0 0 0 0 0 0
Profit Brought Forward 0 0 0 0 0 0
IV. Appropriations 0 0 0 0 0 0
Transfer to Statutory Reserve 6 7 8 10 7 5
Transfer to Other Reserves 11 14 18 24 17 11
Trans. to Government
5 6 5 5 4 3
/Proposed Dividend
Balance Carried Forward to
0 0 0 0 0 0
Balance Sheet
Equity Dividend % 110 130 110 110 100 80
Dividend Per Share (₹) 11 13 11 11 10 8
Earnings Per Share-Unit 50.99 62.62 72.3 89.07 71.99 49.19
Earnings Per Share (Adjusted )-
50.99 62.62 72.3 89.07 71.99 49.19
Unit
Book Value-Unit 522.96 515.68 465.57 405 305.83 244.87
Book Value (Adjusted )-Unit 522.96 515.68 465.57 405 305.83 244.87

Source: India Infoline Research, “Canara Bank,” accessed July 16, 2014, www.indiainfoline.com/markets/
company/fundamentals/profit-loss/canara-bank/5471.

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EXHIBIT 5: CANARA BANK: KEY FINANCIALS BALANCE SHEET, 2009 TO 2014 (₹ BILLION)

Particulars March 2014 March 2013 March 2012 March 2011 March 2010 March 2009
SOURCES OF FUNDS
Capital 4 4 4 4 4 4
Reserves Total 291 245 222 196 142 121
Equity Share Warrants 0 0 0 0 0 0
Equity Application Money 0 0 0 0 0 0
Deposits 4,207 3,558 3,270 2,935 2,346 1,860
Borrowings 272 202 156 143 80 140
Other Liabilities &
147 116 92 84 72 63
Provisions
Policy Holders Fund 0 0 0 0 0 0
Others 0 0 0 0 0 0
Others 0 0 0 0 0 0
TOTAL LIABILITIES 4,921 4,125 3,744 3,362 2,644 2,188
APPLICATION OF
FUNDS
Cash & Balances with RBI 221 154 177 220 157 104
Balances with Banks &
226 193 103 86 39 63
Money at Call
Investments 1,268 1,211 1,020 836 697 583
Advances 3,010 2,422 2,324 2,112 1,693 1,384
Fixed Assets 67 29 29 29 28 29
Other Assets 130 121 88 80 35 41
Miscellaneous Expenditure
0 0 0 0 0 0
Not Written Off
Others 0 0 0 0 0 0
Others 0 0 0 0 0 0
TOTAL ASSETS 4,922 4,130 3,741 3,363 2,649 2,204
Contingent Liability 2,230 2,497 1,928 1,296 1,243 1,514
Bills for Collection 163 140 124 112 75 101

Source: Business Line, “Quarterly Results,” accessed July 16, 2014, www.thehindubusinessline.com/companies/
data/Canara-bank/profit-and-loss/54855/.

EXHIBIT 6: CANARA BANK: COMPARING THE RETAIL GROWTH OF PEER BANKS (₹ BILLION)

March 2012 March 2013 March 2014

Scheme BOB BOI Canara CBI UBI BOB BOI Canara CBI UBI BOI Canara CBI UBI
Home
141.3 83.5 82.6 62.8 105.1 161.3 102.7 87.4 77 124.6 130.8 128.8 108.3 155.3
Loan
Vehicle
24.3 18.2 16.2 8.4 13 29.5 20.4 19.1 10.1 17.3 23.5 31 13 22.2
Loan
Education
18.7 21.9 39.9 21.6 18.6 19.7 24.1 43.4 25.7 20.8 26.5 49 29.8 23
Loan
Mortgage
21.8 16.3 5.3 33.7 13.2 24.8 20.1 5.8 44.5 23.5 29.7 16.1 56.7 37.5
Loan
Personal
15.1 6.9 24.5 9.3 6.1 7.4 7.8 25.8 12.8 6.5 9.3 35.7 15.3 7.6
Loan
Others 135.5 44.5 79.3 33.4 6.4 139.7 48.5 49.4 51.9 5 76.2 74.7 65 6.4
Total 356.7 191.2 247.8 169.2 162.4 382.3 223.5 230.8 222.1 197.7 296 335.3 288.1 251.9
% Growth
NA NA NA NA 7.1 16.9 -6.8 31.3 21.7 32.5 45.4 29.7 27.8
YOY %

Note: BOB= Bank of Baroda; BOI= Bank of India; CBI= Central Bank of India; UBI= Union Bank of India.
Source: Compiled by case authors, based on data collected from Canara Bank Top Management Committee presentations.

This document is authorized for use only in Prof. Deepak Tandon's PGDM-II/Management of Banks- at International Management Institute - New Delhi (IMI) from Jun 2022 to Oct 2022.