Canara Bank on Wednesday reported 32.5% drop in its net profit for the September quarter at R356.9 crore, as a rise in non-performing loans forced the bank to increase its provisioning. A fall in revenue also weighed on the
state-owned lender’s bottomline.
Total income for the quarter came in at R12,187.12 crore, down 2.3% year-on-year, as the bank witnessed a drop in interest income. It would have been further impacted if not for a 47.2% rise in other income, which stood at R1,781.77 crore.
Canara Bank’s net interest income (NII), which is the difference between interest earned and interest expended, declined by 7.7% year-on-year to R2,442.4 crore. Domestic net interest margin (NIM), too, fell by 3 bps to 2.35%.
The lender also reported a weakening of its asset quality, both sequentially and y-o-y. Gross non-performing loans — as a percentage of total loans — increased by 10 basis points quarter-on-quarter to 9.81%, while net NPA remained unchanged at 6.69%. However, since the year-ago period came before the Reserve Bank of India’s asset quality review, the y-o-y change in gross and net NPA were as high as 554 bps and 379 bps respectively.
In absolute terms, the bank reported gross non-performing loans of R33,315.40 crore and net non-performing loans of R21,887.09 crore, as on September 30.
Consequentially, Canara Bank was forced to increase its provisions for bad loans too. For the quarter under review, the bank made provisions totaling R1,585.7 crore, 30.8% higher y-o-y and 6.2% higher q-o-q.
Meanwhile, the public sector lender’s capital adequacy ratio increased 115 bps to 12.19%. Its annualised return on assets fell 13 bps year-on-year to 0.26%.