Canara Bank Q2 results: Net profit jumps three times

State-owned Canara Bank reported a three-times rise in net profit at Rs 1,333 crore for the September quarter, riding on treasury and non-interest income and higher cash recovery.

The bank’s net profit was Rs 444 crore in the year-ago period.

Its net interest margin (NIM), a key profitability parameter, however, dipped to 2.72% in the quarter under review from 2.82% in the same period last year. Net interest income (NII) was a shade lower at Rs 6,273 crore from Rs 6,305 crore while total income rose a slim 2.6% at Rs 21,331 crore.

Its operating profit grew 22% to Rs 5,604 crore as against Rs 4,597 crore. Treasury income jumped 95% to Rs 1,754 crore while non-interest Income rose 37.5% at Rs 4,268 crore. Provision to cover bad loans fell 24% at Rs 2678 crore with improvement in recovery of loans that were already covered.

Bank chief executive LV Prabhakar expects corporate loans to grow at 7.5% for the full year despite muted demand so far, raising hopes of pick up in industrial activities. He expects retail loans to continue to grow by over 10%.

Canara’s gross advances grew 5.8% year-on-year (YoY) to Rs 6.87 lakh crore while the corporate loan portfolio rose 2.2% to Rs 2.96 lakh crore. The retail lending book rose 10.46% to Rs 1.19 lakh crore.

The lender’s asset quality improved sequentially, with gross non-performing assets (NPA) ratio falling to 8.42% at the end of September from 8.5% three months back. Net NPA stood at 3.21% as against 3.46%.

Prabhakar said the bank with 14.37% capital adequacy is comfortably placed for growth and meeting regulations. The lender has just recently raised Rs 1,500 crore in AT-1 capital while the board has approved raising another 2500 crore each in AT-1 bonds and tier-2 bonds. It raised Rs 2500 crore through share sales during this quarter.