Canara Bank Q2 net profit flat at Rs 627 cr, provisioning up 25%

Public sector lender Canara Bank on Thursday reported marginal increase in net profit at Rs 626.84 crore for the second quarter ended September 30, 2014, due to higher provisioning of Rs 999 crore. The bank had reported net profit of Rs 625.94 crore in the corresponding quarter last year.

Net interest income, the difference between interest earned and interest expended, rose 8 per cent to Rs 2,367.8 crore in the quarter ended September 2014 compared to Rs 2,191.2 crore in the corresponding quarter of the previous fiscal.

Total income for the quarter increased 14.2 per cent to Rs 11,915 crore compared to Rs 10,427 crore in the second quarter of 2013-14. Operating profit for the quarter went up 14 per cent to Rs 1,625.54 crore in the year-ago quarter.

“During this quarter, we have seen fresh slippages to the tune of Rs 3,178 crore, as a result of which we had to make higher provisioning for them. We have provided Rs 814 crore compared to Rs 674 crore in the corresponding quarter. This impacted our net profit during the quarter,” Canara Bank Executive Director V S Krishna Kumar said.

Provisions were higher by 21 per cent compared to the year-ago period. Income from loans and advances increased to Rs 8,005 crore, a year-on-year growth of 14.9 per cent.

Non-interest income rose 32.1 per cent to Rs 1,021 crore. Net interest income for the quarter increased 8.1 per cent to Rs 2,368 crore. Net interest margin improved to 2.36 per cent from 2.33 per cent a year ago.

However, return on assets continued to decline to 0.51 per cent compared to 0.58 per cent a year ago. Net non-performing assets increased 11 per cent to Rs 7,170 crore in the second quarter compared to Rs 6,459 crore in the same quarter a year ago.

Capital adequacy ratio as per Basel III norms stood at 10.19 per cent. “We have adequate headroom available to raise capital to support business growth momentum. We have received all approvals from the government to raise Rs 3,000 crore via a Qualified Institutional Placement (QIP),” Kumar said.

Gross non-performing assets (NAP) ratio during the quarter ended September 30 stayed below 3 per cent at 2.92 per cent and net NPA ratio at 2.31 per cent, despite continuing stress on industry bottomlines. Krishna said that under Pradhan Mantri Jan Dhan Yojana, the bank has opened 36.5 lakh accounts so far, with an outstanding balance of Rs 725 crore.