Canara Bank net grows 10%; NIM seen up 50 bps

Written by Banking Bureau | Bangalore, Apr 26 | Updated: Apr 27 2008, 06:41am hrs
Canara Bank expects its net interest margin (NIM) would move up by 40-50 basis points during the current financial year ending March 2009, said MBN Rao, chairman and managing director of Canara Bank. For the fiscal 2007-08 the banks net interest margin was at 2.42%.

Releasing the fiscal results here on Saturday, Rao said, the improvement in net interest margin will be primarily because of reduction in preferential rate deposits and low yielding advances.

He said the bank had taken a conscious decision to shed preferential rate deposits by about 24%.

Rao said the net profit of the bank for the fiscal ended March 2008 grown by 10.15% to Rs 1,565 crore from Rs 1,420.81 crore in the previous year. The banks deposits grew by Rs 11,691 crore to Rs 1,54,072 crore while advances (net) surged by Rs 8,732 crore to Rs 1,07,238 crore. The banks global business touched Rs 2,61,310 crore as at the end of March 2008 while its operating profit surged to Rs 2,959.38 crore from Rs 2,912 crore.

But the bank has reported a negative growth in its fourth quarter. In the quarter ended March 2008, net profit of the bank declined by 8.12% to Rs 464.06 crore from Rs 505.09 crore. The negative growth was mainly because of increase in tax expenses, Rao said. The tax expense in the fourth quarter climbed to Rs 100 crore from Rs 50 in the same period in the previous fiscal.

He said the bank targets to take the global business above the Rs 3,00,000 crore mark, comprising global deposits of Rs 1,75,000 crore and global advances of Rs 1,25,000 crore and global advances of Rs 1,25,000 crore in the current financial year.

After creating of joint ventures in insurance and asset management, Rao said the bank is exploring similar options in other financial services.