Canara Bank has posted a 2.9 per cent growth in interest earned to Rs 1686.8 crore during the quarter to June 2003. Interest from advances (57 per cent of the total interest) has grown by 10 per cent, while interest from investments (41 per cent of the total interest) by 9.9 per cent. A three per cent fall to Rs 1,141 crore in interest expended has done its bit in improving the net interest earned by 18 per cent. In line with the low interest regime, it had decided to cut its prime lending rate by 25 bps to 11 per cent.

Other income has zoomed up by 46 per cent to Rs 376.4 crore. Operating expenses net up by 12 per cent to Rs 424.7 crore. Of this, 70 per cent is on account of payments and provisions for employees. The retail thrust could have also contributed to the rise in outgo due to the expenditure on infrastructure.

The bank has recently launched internet/mobile banking services covering 300 branches.

As a result of growth in interest earnings and other income, operating profit is up by 46 per cent to Rs 497 crore. Net profit has shown a perky growth of 82 per cent to 255.9 crore.

The growth has come even after a provision of NPA provisions and in tax provision up 68 per cent.

It had posted a net profit of Rs 1,019 crore (Rs 741 crore) for FY03, a growth of 37.5 per cent and had also announced a maiden dividend of 35 per cent.

Capital adequacy ratio of the bank has improved from 11.45 per cent to 12.19 per cent, while the return on assets has improved to 1.20 per cent (0.78 per cent). The net NPAs have increased by 17 per cent to Rs 1429.5 crore, but the net NPA ratio has improved to 3.56 per cent (3.66 per cent). Aggregate business of the bank grew by 15.06 per cent to touch Rs 1,13,038 crore, consisting of Rs 72,890 crore in deposits and Rs 40,148 crore in advances.

Canara Bank is one of the big and efficient public sector banks and has a network of over 2,400 branches and 261 ATMs, signifying a good retail presence. It has many subsidiaries in businesses like housing finance, factoring, asset management, merchant banking and venture capital and supports eight regional rural banks.

The strong position of the bank is also indicated by the fact that Sidbi has recently planned a tie-up with it.

The bank plans to reduce governments stake from 73 per cent to below 55 per cent by returning almost 40 per cent of its capital, which will boost the EPS and book value, although the government may insist on premium pricing.

At the same time, intense competition is expected in the banking sector in the future, where technological edge, cost efficiency and retail thrust will become crucial for all banks irrespective of the sectors.