Canara Bank returns to profit on higher interest income, lower provisions

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May 19, 2021 1:45 AM

The bottom-line also got support from lower provisioning for stressed assets. Provisions declined 47% y-o-y to Rs 4,692 crore, but remained flat sequentially. Overall, the net profit for the whole financial year (FY21) stood at Rs 2,557 crore, against net loss of Rs 5,838 crore for FY20.

The lender said that situation arising due to pandemic continues to be uncertain, and the bank is evaluating the situation on an ongoing basis.The lender said that situation arising due to pandemic continues to be uncertain, and the bank is evaluating the situation on an ongoing basis.

Canara Bank on Tuesday reported a net profit of Rs 1,010 crore for the quarter ending March 31 (Q4FY21), against a loss of Rs 6,567 crore during the corresponding quarter last year.

The lender is back in black due to 10% year-on-year (y-o-y) growth in its net interest income (NII) to Rs 5,589 crore. The lender’s operating profit increased 136% y-o-y and 6% quarter-on-quarter (q-o-q) to Rs 5,702 crore.

The bottom-line also got support from lower provisioning for stressed assets. Provisions declined 47% y-o-y to Rs 4,692 crore, but remained flat sequentially. Overall, the net profit for the whole financial year (FY21) stood at Rs 2,557 crore, against net loss of Rs 5,838 crore for FY20.

The lender said that situation arising due to pandemic continues to be uncertain, and the bank is evaluating the situation on an ongoing basis.

LV Prabhakar, MD and CEO of the bank said, “As of now there is no adverse impact due to the second wave of Covid-19. However, the business is not that attractive.” The collection efficiency has come down from 92% in March, 2021 to 88.8% in April 2021, he added. The net interest margins (NIM) of the lender improved 24 basis point (bps) y-o-y to 2.75%, but declined 5 bps sequentially.

The asset quality of the lender improved during the March quarter. Gross non-performing assets (NPAs) ratio of the lender improved 2 bps to 8.93%, compared to reported proforma gross NPAs of 8.95% in the previous quarter.

Similarly, net NPAs ratio improved 11 bps to 3.82% from 3.93% in the December quarter. Lenders had reported NPAs on a proforma basis during the December quarter due to a standstill order from the apex court on declaring NPAs.

Canara Bank registered fresh slippages of Rs 14,495 crore during the March quarter. However, the bank is expecting slippages of around Rs 14,000 crore in FY22. “We expect recoveries to be more than slippages during the current financial year,” Prabhakar said.

The fee-based income of the bank increased 128% y-o-y to Rs 1,770 crore, compared to Rs 776 crore in Q4FY20. Similarly, trading income grew 96% y-o-y to `660 crore. Overall, other income of the lender grew 72% y-o-y to Rs 5,207 crore.

Advances grew 4% y-o-y and 1% q-o-q to Rs 6.75 lakh crore. Retail lending portfolio increased 12.14% y-o-y to Rs 1.1 lakh crore. Advances to agriculture grew 17% y-o-y to Rs 1.56 lakh crore.

Deposits grew 11% y-o-y and 4% q-o-q to Rs 10.1 lakh crore. Current account savings account (CASA) grew 14% y-o-y and 7% q-o-q to Rs 3.3 lakh crore. The capital adequacy ratio (CAR) remained at 13.18% with CET1 ratio of 10.08% at the end of March, 2021. The bank is planning to call a board meet next week to discuss capital raising. “We plan to raise capital through qualitative institutional placement (QIP),” Prabhakar said.

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