Canara Bank net rises 2.2% to Rs 792 cr

The bank's operating profit rose 36% to Rs 1,898 cr, against Rs 1,394 cr in the corresponding period last year

Public sector lender Canara Bank on Saturday reported a marginal rise of 2.2 per cent in its net profit at Rs 792 crore for the quarter ended June 2013, against the corresponding period last year. Its total income rose 14.6 per cent to Rs 10,508 crore, against Rs 9,165 crore in the year-ago period.

The bank’s operating profit rose 36 per cent to Rs 1,898 crore, against Rs 1,394 crore in the corresponding period last year.

The rise in net profit was low primarily due to provisions and contingencies during the quarter. Provisions stood at Rs 916 crore, against Rs 418 crore in the year-ago period. Provisions towards non-performing assets (NPAs) stood at Rs 417 crore.

Net interest income saw growth of eight per cent at Rs 1,991 crore, while non-interest income recorded robust growth of 79 per cent at Rs 1,238 crore. The bank's net interest margin stood at 2.21 per cent. Under Basel-III norms, capital adequacy ratio stood at 11.35 per cent. Returns on assets fell to 0.75 per cent from 0.83 per cent in the year-ago period. The percentage of net NPAs increased from 1.66 per cent to 2.48 per cent.

"Canara Bank witnessed significant asset quality deterioration during the quarter, as gross and net NPA levels increased sequentially, about 17 per cent each. We believe asset quality pressures for the banking sector are unlikely to abate as quickly as was expected earlier, considering the recent macro developments in an overall weak macro environment. Hence, we recommend a 'neutral' rating on the stock," said Vaibhav Agrawal, vice-president (research), banking, Angel Broking.

Deposits rose 14.2 per cent to Rs 3,81,972 crore from Rs 3,34,619 crore in the corresponding period last year, while advances increased 10.8 per cent to Rs 2,49,891 crore from Rs 2,25,584 crore in the year-ago period.