Canara Bank fixes May 15 as record date for 1:5 stock split

Public sector lender Canara Bank has set May 15 as the record date for determining entitlement of equity shareholders for its stock split.  The shares of the bank will be sub divided in a 1:5 ratio, through which one equity share with face value of ₹10 will be divided into five equity shares, each with a face value of ₹2. A stock split is a corporate action where a company increases the number of outstanding shares to make it more affordable for small retail investors and increase liquidity.

“The bank has fixed May 15, 2024, as the “Record Date” for determining entitlement of equity shareholders for the purpose of sub division/split of existing equity shares of the bank, such that 1 equity share having face value of ₹10 each, fully paid up, will be sub divided into 5 equity shares having face value of ₹2 each, fully paid up,” Canara Bank says in a BSE filing today.

On Friday, shares of Canara Bank ended at ₹578.70, down 0.83% against the previous closing price of ₹583.55. The stock price has nearly doubled in the last one year, from its 52-week low of 291.30 touched on May 19, 2023. The PSU bank hit its 52-week high of 620 on April 8, 2024. The counter rose 57% in six months and 5% in a month.

The board of the public sector lender had approved the stock split proposal on February 26, subject to requisite regulatory approval.

In the October-December quarter of the current fiscal, Canara Bank reported a net profit of ₹3,656 crore, up 26.87% from ₹2,881.5 crore in the same period last year. The net interest income (NII) grew 9.5% to ₹9,417 crore as against ₹8,600 crore in the year-ago period, while the net interest margin (NIM) improved by 9 bps to 3.02%.

On the asset quality front, the gross non-performing assets (GNPA) ratio improved to 4.39% in Q3 FY24 as against 4.76% in September 2023, and 5.89% in December 2022. In a similar trend, the net non-performing assets (NNPA) ratio dropped to 1.32% against 1.41% in Q2 FY24 and 1.96% in Q3 FY23.

During the quarter under review, the lender’s provisions fell to ₹1,899 crore from ₹2,609 crore in the September quarter of 2023 and from ₹3,124 crore in December 2022. The provision coverage ratio (PCR) improved to 89.01% as of December 2023 from 86.32% as of December 2022. 

Earlier this week, Fitch Ratings assigned 'BBB -' for Canara Bank, with stable outlook. It has also affirmed the Viability Rating (VR) at 'bb-' and Government Support Rating (GSR) at 'bbb-'. “Canara's Long-Term IDR and its GSR are at the same level as India's sovereign rating (BBB-/Stable), reflecting our view of a high probability of extraordinary state support for the bank, if required,” it says in a report.

The rating takes into consideration the government's 63% ownership as well as the bank's large size and reach, and its assessment of the state's strong propensity to support the banking system in general. The Stable Outlook on the IDR mirrors that on the sovereign IDR.