Canara Bank Q2 net down 27% to Rs 260 crore

Higher provisioning led to drop

 Public sector lender Canara Bank on Friday reported a 27.10% drop in its  net profit in the second quarter ended September 30, 2017, to Rs 260.18 crore, compared with Rs 356.91 crore in the same quarter last year.

Canara Bank MD and CEO Rakesh Sharma attributed the drop in profits to higher provisioning. The bank has provided Rs 1,950 crore towards non performing assets, which is 25.11% higher than the corresponding quarter last year. Overall provisions stood at Rs 2,156.64 crore during the second quarter compared with Rs 1,585.74 crore a year ago.

Net Interest Income (NII), or the difference between the interest earned on loans and the interest paid on deposits, grew by 14% at Rs 2,783.37 crore, compared with Rs 2,442.35 crore in the same period last fiscal.

Canara Bank’s total income during the second quarter stood at Rs 11,995 crore, down from Rs 12,187 crore in the same quarter a year ago, showing a marginal decline of 1.57% year on year.

The bank’s Gross Non-Performing Assets (GNPA) stood at Rs 39,164.08 crore, compared with Rs 33,315.40 crore in the same period last fiscal. The net NPA ratio stood at 7.02% from 6.69% a year ago.

Sharma said, “In spite of the headwinds in NPA resolution, we could keep the slippages under control and the NPA ratios have shown some improvement. We expect the net NPA level to decline to below 6% level by the year-end. The provision coverage ratio has improved to 54.75% from 51.75% last year, and it will be 60% in mid-term.”

Talking about slippages, he said while in the first quarter it was Rs 5,511 crore, in the second quarter it was Rs 3,367 crore.

Canara Bank is expected to be a significant beneficiary of the proposed bank recapitalisation programme of the government. “This will further boost the growth momentum of the bank. This, coupled with the corrective steps initiated would lead to further significant improvement in the profitability of the bank,” he said.

The bank’s CASA deposits went up by 17.72% year-on-year, and its global business reached Rs 8.55 lakh crore, up by 5.33% Y-o-Y.

The public sector lender’s e-transactions ratio stood at 73.40%, from 59.30%, a year ago.

Sharma said the bank’s network of digital branches named ‘CANDI’, which is at present on MG Road, will be increased. “We are planning to open five CANDI branches by the end of this fiscal year. The next branch will be opened in Chennai,” he said.

The bank’s stock settled at Rs 403.75, down 4.64% on the BSE.