Canara Bank reports 12% rise in Q1 net profit

The public sector lender Canara Bank on Wednesday surprised the market by posting 11.87% increase in net profit at Rs 281.49 crore for the first quarter ended June 2018 aided by higher interest income.

Incidentally, the bank had reported a record net loss of Rs 4,860 crore in the fourth quarter of the last fiscal ended March 2018.

The bank had posted net profit of Rs 251.60 crore in the corresponding quarter of the last year. Its net interest income surged 43.13% during Q1FY19 to Rs 3,883 crore compared with Rs 2,713 crore in the corresponding quarter.

Canara Bank's non-interest income comprising of insufficient funds fees, annual fees, monthly account service charges, inactivity fees, check and deposit slip fees, among others, during the first quarter stood at Rs 1,833 crore compared with Rs 2,109 crore in Q1FY18.

"The bank has taken various steps and changes in the last 3-4 years in business portfolio and organisational restructuring, resulting in good results," Rakesh Sharma, MD and CEO of Canara Bank said.

He informed that cash recovery is Rs 3,537 crore, resulting in both gross and net NPAs improving sequentially to 11.05% and 6.91%, respectively.

The bank's provision coverage ratio stood at 60.69% from 54.52% last year. "Slippages are slightly higher in this quarter and we are hopeful that it will be upgraded in second and third quarters," Sharma said.

The bank's NII growth is primarily due to the 15.12% Y-o-Y growth in domestic credit backed by a whopping 36.22% growth in retail credit which in turn has contributed to the 14.87% Y-o-Y increase in interest income from advances, the bank said.

The bank's total business registered 10.96% growth to reach Rs 9.2 lakh crore, its domestic business grew by a higher 13.06% Y-o-Y to reach Rs 8.63 lakh crore.

The CASA deposits posted a 9.1% Y-o-Y growth with the Savings Bank deposits registering a higher 11.75% Y-o-Y growth. While capital adequacy ratio improved to 13%, up from 12.61% a year ago, its cost to income ratio came down sequentially from 50.03% to 48.68%.

The bank is keen on strengthening the balance sheet through augmenting retail business, digitalisation and transformation.

Shares of the bank closed at Rs 258.90, up 2.29% on the BSE on Wednesday.