Canara Bank Q2 net triples to Rs 1,333 cr on surge in non-interest income

NII shrinks 0.5% to Rs 6,273 cr; asset quality profile is broadly stable

Canara Bank posted a 200 per cent rise in net profit at Rs 1,333 crore in the second quarter ended September 30, 2021 (Q2FY22) on robust growth in non-interest income including revenue from trading and recoveries. The Bengaluru-based public sector lender had posted a net profit of Rs 444 crore a year ago in Q2FY21.

According to the investor presentation, the bank's net interest income (NII) shrank by 0.51 per cent on YoY basis to Rs 6,273 crore in Q2FY22 from Rs 6,305 crore for Q2FY21.

The lender's non-interest income was up 37.54 per cent YoY to Rs 4,268 crore in Q2FY22 from Rs 3,103 crore a year ago. This includes a 144 per cent rise in treasury income of Rs 1,133 crore, recoveries 30.7 per cent at  Rs 584 crore and fee-based income showed a 20.2 per cent growth at Rs 1,463 crore.

Its stock was trading 3.09 per cent down at Rs 195. 7 per share on BSE.

Its global deposits rose by 8.83 per cent on YoY basis to Rs 10,32,536 crore in Q2FY22 and gross advances grew by 5.83 per cent YoY to Rs 7,26,854 crore in Q2FY22 from Rs 6,86,813 crore in Q2FY21.

The bank expects deposit growth to moderate to 8.2 per cent and credit growth to speed up to 7.5 per cent by March 2022.

Its asset quality profile was broadly stable though. Gross non-performing assets (NPAs) rose to 8.42  per cent this September from 8.23 per cent a year ago. Net NPAs reduced to 3.21 per cent in September 2021 from 3.42 per cent a year ago. Its provision coverage ratio improved to 82.44 per cent at end of Q2FY22 from 81.48 per cent at end of Q2FY21.

Canara Bank said in its presentation that it is working to reduce GNPAs to 7.9 per cent and net NPAs to 2.8 per cent by March 2022. It has also guided for improvement in PCR to 83.95 per cent by end of FY22.

The lender's Capital Adequacy Ratio (CAR) stood at 14.37 per cent with Common Equity Tier-1 ratio of 11.41 per cent for Q2FY22. Bank has raised Rs 2,500 crore in equity capital from Institutional investors and additional tier-I (AT1) capital of 1,500 crore so far in the current financial year (Fy22). It intends to raise Rs 2,500 crore in AT1 capital and Rs 2,500 crore in Tier II bonds in balance part of current financial year.