Canara Bank Q1 net profit up 82.5%

Bangalore-based public sector lender, Canara Bank, today reported a whopping 82.5 per cent year-on-year rise in net profit at Rs 1,013 crore for the quarter ended June.

“The rise in profit was mainly on account of an eight-fold increase in treasury income to Rs 224 crore, containment of expenses and strong pricing of loans during the quarter. Our total expenditure rose 7.3 per cent to Rs 4,412 crore during the quarter. Most of the net profit came from the net interest income, which grew 33.8 per cent to Rs 1,728 crore,” said A C Mahajan, chairman and managing director, Canara Bank.

Net interest margin (NIM) crossed the three per cent mark for the first time. It rose to 3.01 per cent from 2.7 per cent during the year-ago period. Operating profit rose 61 per cent year-on-year to Rs 1,483 crore, while total income grew 17.1 per cent to Rs 5,895 crore.

Provisions and contingencies were almost flat at Rs 220 crore, as compared to Rs 216 crore during the year-ago period. Tax expenses shot up 66.6 per cent to Rs 250 crore during the quarter.

Capital adequacy ratio (CAR) declined to 12.44 per cent from 13.59 per cent a year ago. “This was mainly due to an increase in the bank’s assets. According to the new Reserve Bank of India guidelines, we cannot include quarterly profit while calculating CAR. We have to include only the annual profit for the purpose of its calculation,” said Mahajan.

He said CAR might further come down in the September quarter on rising credits. “To ensure that it remains above the 12-per cent mark, the bank will definitely go for fund raising. We may go for a tier-II capital, or a perpetual bond issue of around Rs 500-600 crore during the second quarter to augment CAR,” he said.

Total business of the bank rose 23.4 per cent year-on-year to Rs 4,12,649 crore during the June quarter. Net advances also grew 23.5 per cent to Rs 1,73,794 crore. The share of Casa (current account, savings account) deposits increased 28.8 per cent year-on-year to Rs 69,350 crore.

Return on assets improved to 1.55 per cent from 1.02 per cent a year ago. Earnings per share also jumped to Rs 24.72 from Rs 13.54 in June last year. The bank’s net non-performing assets ratio declined to one per cent from 1.29 per cent during the year-ago period.