Canara Bank chairman wants asset quality to improve further

The bank expects new bad loans to fall to about Rs 1,300 cr in the December quarter from Rs 2,800 cr in June

State-run lender Canara Bank expects asset quality to improve by 20-30 basis points by March as it focuses on aggressive debt collections and better monitoring of performing accounts, a top official said.

The No. 5 ranked state bank expects new bad loans to fall to about  Rs 1,300 crore in the December quarter from Rs 2,800 crore in June, Chairman and Managing Director R K Dubey told Reuters.

It will recover and upgrade loan accounts of Rs 4,000-5,000 crore in the period, he added.

"I want to slowly improve the bank's asset quality. Even if I reduce it by 10 to 15 basis points by December I will still be against the market trend," Dubey said over the phone from Bangalore where he is based.

For the quarter-ended September, Canara Bank's net profit was mostly flat compared with a year earlier. Non-performing loans improved to 2.64% from 2.91% in the preceding quarter.

The bank, which is growing its loans by about 30%, plans to raise Rs 2,500 crore through Tier-II bonds by March to shore up its capital base, Dubey said.