Canara Bank net declines 22.4% in Q2 at Rs 661 crore

Despite lower provisions towards bad loans and lower credit offtake, the Bangalore-based public sector lender Canara Bank has reported 22.4% drop in net profit at Rs 661 crore for the second quarter ended September 2012 compared to Rs 852 crore reported in the corresponding quarter last fiscal.

The total income for the quarter was up 9% to Rs 9,204 crore as against Rs 8,437 crore in the same period last year.

The operating profit for the second quarter also declined 20% to Rs 1,282 crore as against Rs 1,600 crore in the year ago period. The net interest income for the second quarter was almost flat at Rs 1,957 as against Rs 1,962 in the year ago period. The net interest margin dipped to 2.35% from 2.51% in the second quarter of last fiscal.

The non interest income of the bank was also down 26% to Rs 608 crore in the second quarter as against Rs 823 crore a year ago.

"Our net profit was impacted during the second quarter mainly on account of higher interest outgo for bulk deposits, slower credit offtake, fresh slippages and restructuring of large corporate accounts. We have restructured accounts involving an amount of Rs 600 crore during the quarter," Archana Bhargava, executive director, Canara Bank said.

She said the bank reduced its bulk deposits to the tune of Rs 20,000 crore in the second quarter and the bank hopes to meet the government expectations by end of March 2013. The bank still has around Rs 60,000 crore bulk deposits.

During the second quarter the bank made a provision of Rs 421 crore towards bad loans, which was 23% lower than the corresponding quarter last year.

The bank’s return on assets declined to 0.71% in September 2012 quarter as against 1.01% in the year ago period. The capital adequacy ratio under Basel-II declined to 13.07% from 13.78% in the year ago period.