SWOT Analysis of CANARA BANK The accelerating shift in economic power from the developed to emerging economies is dramatically

changing the banking industry across the world. The international banking scene has in recent years witnessed strong trends towards globalization and consolidation of the financial system. Stability of the financial system has become the central challenge to bank regulators and supervisors throughout the world. The multi-lateral initiatives leading to evolution of international standards and codes and evaluation of adherence thereto representtresolute attempts to address this challenge. The Indian banking scene has witnessed progressive deregulation, institution of prudential norm and an emulation of international supervisory best practices. The supervisory processes have also concomitantly evolved and have acquired a certain level of robustness and sophistication in the banking industry. Strengths of Indian Banks In the short-term, most developed economies experienced a significanteconomic slowdown or recession in 2008-9, reducing significantly the growth of domestic banking assets. Emerging economies such as India by contrast tended tomaintain relatively high growth rates, although some temporary economicslowdown was experienced in certain cases. In 2010, however, emergingeconomies grew strongly in general, while the recovery in Europe in particular remained relatively weak.

High standard regulatory environment. The policy makers, which comprisethe Reserve Bank of India (RBI), Ministry of Finance and related overnmentand financial sector regulatory entities, have made several notable efforts toimprove regulation in the sector.

Bank lending has been a significant driver of GDP growth and employment

Presence of more number of Smaller banks that would likely to be impactedadversely A pproximately 53000 networks of branches spread all over the country provides easy access to entire spectrum of customers.

Diversification in their operations Banks offer an entire gamut of servicesincluding insurance, investment banking, asset management, private equity,foreign exchange, payment of utility bills to customers, mobile and internet banking.

Large manpower with relevant banking skills to manage the operations.

Technological up gradation changing the way the banking is done. Anywhere banking and anytime banking has become a reality and thusmaking service faster, error free and competitive. Banks have gained financial strengths in terms of Productivity and Profitability.

Weakness of Indian Banks Indian commercial banks, particularly PSBs have been witnessing the followingchallenges which have become bottlenecks in achieving competitive edge over their rivals.

Low operating size

High operating costs

Inadequate deposit mobilization efforts

High level of nonperforming assets

Financial exclusion Complex and non-responsive organizational structures

Credit to non-productive sectors like commercial estate

Poor customer service

Unsatisfactory work culture

Feudalistic attitude of thee staff

Ethnocentric and action flippant management

A bsence of organizational focus on the employees leading to their demotivation

Inadequate access to global financial system

The cost of banking intermediation in India is higher and bank penetration isfar lower than in other markets

Inadequate risk management skills particularly to cope with market risks and per Basel II norms

Structural weaknesses such as a fragmented industry structure, restrictionson capital availability and deployment, lack of institutional supportinfrastructure, restrictive labour laws, weak corporate governance andineffective regulations beyond Scheduled Commercial Banks (SCBs)

The inability of bank managements (with some notable exceptions) toimprove capital allocation, increase the productivity of their service platforms and improve the performance ethic in their organisations couldseriously affect future performance

Opportunities for Indian banks Increasethe profitability by accessing international financial market for procuring funds cheaply and deploy funds prudently.

The emerging economies banking sectors are expected to outgrow those inthe developed economies.

To acquire any company, non-bank finance company, housing finance or other businesses to increase their balance sheet size and go into areas wherethere is lot of potentials.

Projected changes in population havev an important effect on some countries relative growth rates. For instance, Russia, Japan and Republic of Korea are expected to experience population falls, depressing overall GDP growth. Nigeria, Saudi Arabia and India are all expected to experience strong population increases, thereby boosting overall GDP growth. Some advanced economies (e.g.US,Australia) are projected to have stronger population growth than some emerging economies (notably China due to itsone child policy).

The emerging economies market exchange rates are expected to appreciateover time in real terms due to relative stronger productivity growth (the so-called Balassa- Samuelson effect). This provides a boost to growth in all of the emerging economies when measured in real US$ terms. Note that thisreal exchange rate appreciation could arise due to nominal appreciationand/or higher inflation rates in the countries Concerned Freedom to pursue new lines of business as part of overall businessstratergy.

Freedom in pricing and Structuring their products

Opportunities to access foreign market.

Robust economic health of the country and development in different sectors promises the growth opportunities.

Growing SME sector leading to greater demand of credit facilities.

High growth opportunities in Processing sector which at present processesonly 2 percent of fruits and vegetables contributing only 1 percent to globalfood processing and 350$ billion worth is fruits and farm products arewasted.

Boom in Indians consumer spending

Huge opportunities in rural area where people still depend of money lendersand relatives.

Threats

Competition among banks for highly rated corporates needing lower amountof capital may exert pressure on already thinning interest spread. Further,huge implementation cost may also impact profitability for smaller banks.

The biggest challenge is the re-structuring of the assets of some of the banksas it would be a tedious process, since most of the banks have poor assetquality leading to significant

Proportion of NPA This also may lead to Mergers & Acquisitions, which itself would be loss of capital to entire system

Huge surplus manpower, absence of good work culture, antiquated labour laws, inflexible and inefficient labour and existence of strong labour union.

High level of Non Performing assets(NPA). 6 percent of the advances arestill blocked up which is about 58000 Crore. Therefore problem of non recognition of interest income and loan loss provisioning exists.

The house hold savings comprising financial assets are moving away from bank deposits to more sophisticated form of financial assets such as mutualfunds, stocks and derivatives.

Asset liability mismatch

Demanding customers are ready to jump from one bank to another whenthey are not satisfied with the service provided. This causes major threat particularly to PS Us.

Competition from new players.

Competition at global level in terms of product innovation and product mix.

Keep pace with the fast growing technology. The current business environment demands