Canara Bank shares rallied over 4 per cent intraday on Tuesday despite the public sector lender reported 52.19 per cent fall in net profit figures at Rs 228.95 crore for the quarter ended June 30, 2016 against Rs 478.84 crore in the corresponding quarter a year ago. Provisions and Contingencies of the bank jumped 9.80 per cent year-on-year to Rs 1,492.92 crore in the quarter under review.
Asset quality of the bank deteriorated as gross non-performing assets (NPAs) stood at 9.71 per cent of gross advances in April-June 2016 against 3.98 per cent in the same period a year ago.
According to Reliance Securities, Canara Bank reported substantial improvement in its performance with operating profit clocking at Rs 1,820 crore (up 10.5 per cent qoq), which is 18 per cent ahead of expectations. Post Q1 results, the brokerage house upgraded the stock to ‘Buy’ from earlier ‘Hold’ rating with revised target price of Rs 291.
Total income of the bank slid by 3.81 per cent year-on-year at Rs 11,789.35 crore against Rs 12,252.64 crore in the same quarter last year.
Siddharth Purohit, senior equity research analyst, banking, Angel Broking said, “Canara Bank’s 1QFY17 results has been mixed bag. Though at the bottom-line level it has turned positive, high other income has supported the PAT. On the operating front the banks performance continues to be disappointing. While the quarter seems to have brought some relief in the asset quality, the net NPA of 6.69 per cent indicates more provisions going ahead which could keep the bottom-line under pressure. We maintain our ‘Neutral’ rating on the stock.” Canara Bank had reported a net loss of Rs 3,905.49 crore in the sequential quarter ended March 31, 2016.
Other income of Canara Bank increased by 42.38 per cent year-on-year to Rs 1,584.65 crore during the quarter under review. The share price of Canara Bank closed 1.60 per cent up at Rs 257.75.