Canara Bank Q3 net plunges 61% to Rs 1.26 bn due to higher NPA provisions

CMD Rakesh Sharma said, 'We had to make Rs 740 million provision on treasury bonds which affected the decline in profits'

Canara Bank Limited net profit plunged 61 per cent to Rs 1.26 billion (Rs 126 crore) in its third quarter financial results ended December 31, 2017, due to higher provisions for Non Performing Assets (NPAs).

The net profit stood at Rs 1.26 billion (Rs 126 crore) for the quarter ended December 31 compared with Rs 3.22 billion (Rs 322 crore) a year ago, the bank said.

"The net profit has declined to 61 per cent, mainly because of an ageing provision on the treasury. Hence we had to make Rs 740 million (Rs 74 crore) provision on treasury bonds which affected the decline in profits," Canara Bank Limited Managing Director and CEO Rakesh Sharma told reporters.

"However, it is only a provision. Let us see how the yields move in the next quarter. Accordingly, we will take a view to make adjustments," he told PTI after announcing the results here.

Sharma said the gross NPA Ratio stood at 10.38 per cent, down sequentially from 10.51 per cent as on September 2017, while net NPA stood at 6.78 per cent, down sequentially from 7.02 per cent as at September 2017.

The net interest margin improved to 2.64 per cent domestically and 2.39 per cent globally, he added.

The cost of deposits came down by a healthy 72 bps to 5.59 per cent from 6.31 per cent, Sharma said.

He also said net interest income growth of 52.4 per cent and 11.29 per cent growth in non-interest income, excluding trading profits significantly shielded them from unexpected quarter-end surge in bond yields and resultant market-to-market provisions.

The banks' strenuous efforts for recovery has resulted in improved recovery under stressed assets, especially written off assets, thereby improving the bank's non-interest income, he said.