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Canara Bank Q3 net profit rises over two folds on lower provision, healthy NII growth

During Q3, Canara Bank’s global gross advances rose 9.3% on year to Rs 7.29 crore.

Owing to lower slippages, Canara Bank made provisions amounting to Rs 2,946 crore in the reporting quarter. On a yearly basis, provisions were down 36%, while on a sequential basis they were down 31%. The lender’s provision coverage ratio improved to 83.26% as of December-end.
Corporate loans, at Rs 3.2 lakh crore, grew 10.8% on year, as per the bank’s Q3 earnings presentation.

State-owned lender Canara Bank on Thursday reported an over two-fold year-on-year increase in net profit in the October-December (Q3) at Rs 1,502 crore, on the back of lower provisions and healthy rise in net interest income (NII). On a sequential basis, the bank’s bottomline grew 12.7%.

During Q3, Canara Bank’s global gross advances rose 9.3% on year to Rs 7.29 crore. Of these, retail loans grew 10% on year to Rs 1.23 lakh crore, agriculture and allied loans grew 11.9% to Rs 1.68 lakh crore and loans to micro, small and medium enterprises (MSME) grew 1.3% to Rs 1.15 lakh crore. Retail, agriculture and MSME loans formed 56% of the bank’s portfolio. Corporate loans, at Rs 3.2 lakh crore, grew 10.8% on year, as per the bank’s Q3 earnings presentation.

Addressing the media in a post-earnings conference, Canara Bank managing director and chief executive officer LV Prabhakar said the bank will not face a challenge in delivering double-digit credit growth in the current fiscal.

On the liabilities side, Canara Bank’s global deposits grew 7.2% on year to Rs 10.4 lakh crore by the end of December. Of these, domestic low-cost current account and savings account (CASA) grew 10.3% on year to Rs 3.4 lakh crore. In percentage terms, the bank’s domestic CASA ratio improved to 34.60% from 33.41% a year ago.

Further, owing to a healthy growth in advances, Canara Bank’s NII for the quarter ended December stood at `6,946 crore, up 14.11% on a yearly basis. The lender’s net interest margin stood at 2.83% in the reporting quarter.

Canara Bank’s asset quality improved in the reporting quarter, with the bank’s gross and net non-performing asset ratio standing at 7.80% and 2.86% as on December 31, lower than 8.42% and 3.21% as of September-end, respectively. Fresh slippages stood at Rs 2,699 crore in the reporting quarter, lower than6,525 crore a quarter ago but higher than Rs 395 crore during the corresponding period a year ago.

Owing to lower slippages, Canara Bank made provisions amounting to Rs 2,946 crore in the reporting quarter. On a yearly basis, provisions were down 36%, while on a sequential basis they were down 31%. The lender’s provision coverage ratio improved to 83.26% as of December-end.

Further, Canara Bank has exposure of Rs 3,100 crore to SREI Group companies and the lender had made 50% provisions against this during the quarter ended September. During October-December, the bank increased its provision against this account to 75%, Prabahakar said.

He said the bank may raise another Rs 1,000 crore going ahead by way of additional tier-I bonds depending on market conditions and at suitable interest rates. As on December 31, Canara Bank’s capital adequacy ratio stood at 14.80%, of which common equity tier — I ratio stood at 10.12%.

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