Canara Bank Announces Share Split 1:5: Canara Bank, a public sector lender, recently announced that its Board has approved a share split, where each share will be split into five shares. This decision aims to enhance the liquidity of the bank’s shares and make them more affordable for retail investors, thus broadening the investor base.
Canara Bank Share split: Timeline for Share Split
The share split process is expected to be completed in 2-3 months, according to Canara Bank. The bank has projected that the share split process will likely take 2 to 3 months from the date of intimation of the Board Meeting (February 7, 2024) to the Stock Exchanges, factoring in the duration needed to secure RBI’s approval.
Canara Bank Announces Share Split 1:5: Impact on Share Value
Following this announcement, Canara Bank’s share closed 1.5 per cent lower at Rs 571.9 on the Bombay Stock Exchange (BSE). Currently, the face value of a Canara Bank share is Rs 10, which will be reduced to Rs 2 post-split.
Canara Bank : Financial Performance
In the previous quarter ending December 2023, Canara Bank reported robust financial performance with a nearly 27 per cent increase in net income to Rs 3,659 crore. This growth was supported by lower credit costs and higher interest income.
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Canara Bank: Asset Quality and Provisioning
The bank’s net interest income rose by 9.50 per cent to Rs 9,417 crore, surpassing the target. Credit costs decreased significantly by 24 basis points (bps) to 0.97 per cent. Canara Bank also witnessed an improvement in asset quality, with gross bad loans decreasing by 150 bps to 3.39 per cent, and net bad loans improving by 64 bps to 1.32 per cent in the reporting quarter.
The provision coverage ratio of the bank stood at 89.01 per cent, an improvement of 269 bps, leading to a core capital of 15.78 per cent. Overall, Canara Bank’s financials reflect a positive trend, with net interest income at Rs 9,417 crore, up 9.50 per cent, and net interest margin improving by 9 bps to 3.02 per cent.
What is Share/Stock Split?
A share split, also known as a stock split, is a corporate action where a company increases the number of its outstanding shares by dividing each existing share. The total value of the shares remains the same, but the share price decreases proportionally. For example, in a 2-for-1 split, each shareholder receives two shares for every share they own, effectively halving the share price. Share splits are usually done to make shares more affordable for retail investors and increase liquidity.
