Canara Bank's net soars 4.5 times to Rs 555 cr

Bangalore-based public sector lender Canara Bank today reported a 4.5-time growth in its net profit at Rs 555 crore for the first quarter of the current financial year compared to the corresponding quarter of the last fiscal.

The huge growth came about as the bank managed to reduce its provisions and contingencies by 10 per cent to Rs 486 crore, including income tax. Adding to this were good growth in corporate credit, higher growth in other income and containment of interest expenses during the quarter.

Driven by a 26.8 per cent growth in interest income from advances, the bank’s total income for the quarter stood at Rs 5,032 crore, a growth of 22.8 per cent.

The net interest income (NII) improved to Rs 1,291 crore, recording a growth of 26.7 per cent. The bank’s net interest margin (NIM) rose from 2.57 per cent as at the end of June 2008 to 2.7 per cent at the end of June 2009, a growth of 13 basis points.

The bank’s non interest income grew by 28.5 per cent to Rs 474 crore as at June-end this year. This includes Rs 172 crore from commission and exchange fee, Rs 239 crore from miscellaneous income such as insurance commission, service charges, income from safe custody, etc. The income from written off accounts was Rs 79 crore during the quarter.

The operating profit for the quarter rose by 48 per cent to Rs 1,041 crore. The bank has made a total provision of Rs 486 crore, including a provision of Rs 216 crore towards non-performing assets (NPAs) and Rs 75 crore for wage settlement, CMD A C Mahajan said.

The bank’s asset quality has been influenced by the ongoing economic downturn. The gross NPA ratio at 1.74 per cent has risen from 1.1 per cent a year ago, while the net NPA ratio rose to 1.29 per cent from 0.85 per cent.