Canara Bank Q3 profit jumps nearly four-fold after asset quality weakens

Public sector lender Canara Bank on Friday posted its Q3 results of October-December quarter, which increased 279 percent to Rs. 322 crore compared with Rs. 85 crore in year-ago period.

The company reported that its asset quality worsened further on sequential basis. Profit was lower-than-expected due to higher tax and provisions and slow NII growth despite sharp increase in other income and operating profit.

Net interest income, the difference between interest earned and interest expended, grew by 8.4 percent year-on-year to Rs. 2,414 in the quarter ended December 2016.

Other income shot up 53.3 percent year-on-year to Rs. 1,791.7 crore and operating profit was up 27.6 percent at Rs. 1,981.33 crore in October-December quarter. Asset quality weakened further during the quarter. Gross non-performing assets (NPA) as a percentage of gross advances increased to 9.97 percent (from 9.81 percent QoQ) and net NPA rose 9.72 percent (from 6.69 percent) in Q3.

The provisions of the company for bad loans increased four percent year-on-year to Rs. 1,486 crore but sequentially declined 6.3 percent in December quarter.

Its provision coverage ratio improved QoQ to 52.52 percent in Q3 from 51.8 percent Q2. Tax expenses during the quarter jumped 353.4 percent to Rs. 175 crore compared with year-ago period.