Canara Bank net slips 5.3%

Bangalore-based Canara Bank reported a 5.3 per cent drop in net profit to Rs 626 crore in the second quarter this financial year, compared to Rs 660.9 crore in the corresponding quarter last year. It said the marginally lower profit was on account of a sharp increase in bond yields, cutting the trading profit to Rs 69 crore compared to Rs 444 crore in the same period last year.

Net interest income increased 12 per cent to Rs 2,191 crore, boosting the total income to Rs 10,427 crore, a growth of 13 per cent. Net interest margin was 2.3 per cent as against 2.2 per cent earlier. Despite tough headwinds in the economy, operating profit grew 11 per cent to Rs 1,425 crore, said R K Dubey, chairman and managing director, on Tuesday.

The bank had a bad loan book of Rs 7,500 crore. It said total provisioning in the quarter was Rs 799 crore, compared to Rs 621 crore for the corresponding period last year and Rs 1,106 crore for the first quarter this financial year. The provision for non-performing assets (NPAs) during the quarter was Rs 347 crore and that for depreciation on investments was Rs 85 crore. However, net NPAs diminished to 2.3 per cent of the total, down from 2.5 per cent as on June.

The public sector lender said it had made huge provisions towards Winsome Diamonds, which has defaulted to many banks, adding to the bad loan book. "The outstanding amount is close to Rs 600 crore, followed by Deccan Chronicle at close to Rs 300 crore.  The power segment, as a whole, is also causing a lot of problems. We have restructured as much as Rs 7,500 crore of loans primarily advanced to distribution companies," a senior official said. Dubey added the bank would be raising Rs 500 crore through preferential allotment shortly and there was a possibility of raising another Rs 600 crore, if they were able to increase the retail lending portfolio to Rs 6,000 crore this financial year.

The stock rose 1.8 per cent to close at Rs 251.25 a share on the National Stock Exchange on Tuesday.