Canara Bank net profit grows 1.9% in Q1 to Rs 806 cr

Higher NPA provisions hits Bank's profit in Q1

Bangalore-based public-sector lender Canara Bank on Monday reported a mere 1.9 per cent growth in net profit at Rs 807 crore for the quarter ended June 30, 2014, compared to Rs 792 crore in the year-ago period. The total income for the quarter under review increased 11.6 per cent to Rs 11,728 crore, compared to Rs 10,508 crore in the same quarter last year.

“The bank has recorded net profit in excess of Rs 800 crore after eight quarters. In the past two years, it was below Rs 800 crore. It could have gone down this quarter also as we have made a lot of provisions and increased our provision coverage ratio to 60 per cent from 58 per cent a year ago,” said R K Dubey, chairman and managing director.

The marginal growth in net profit was aided by a 22% growth in net interest income, which stood at Rs 2,429 crore as against Rs 1,992 crore in the year ago period. The bank made record cash recovery at Rs 2,019 crore in the first quarter compared to Rs 888 crore last year, Dubey said.

The Bank?s total expenses for the quarter increased by 15.4% to Rs 9,933 crore. Total provision for the quarter came down to Rs 988 crore including tax of Rs 200 crore compared to Rs 1,106 crore for the Q1FY14 and Rs 1,271 crore for Q4FY14. The provision for NPAs during the quarter was Rs 1,125 crore as against Rs 433 crore in the corresponding quarter last year, he said.

The operating profit declined 5.4% to Rs 1,795 crore as against Rs 1,898 crore in the year ago quarter.

The net interest margin improved to 2.42% from 2.33% a year ago. The percentage of gross NPA came down to 2.67% from 2.91% and the net non-performing assets percentage stood at 2.03% from 2.48% a year ago. The return on assets dipped to 0.66% from 0.75%. It would again go up to last year?s level by end of this year, Dubey said.

The Chairman said the Bank would be raising Rs 3,000 crore via Qualified Institutional Placement (QIP) issue during the second quarter to shore up its Tier-I Capital. Currently, the Tier-I stands at 7.39% (as against the mandatory requirement of 7%). "We will be taking the approval from the shareholders later today for the QIP issue. The approval from Reserve Bank of India has been received. We will go the market in the second quarter itself within a month," Dubey added.