Canara Bank Q1 net plunges 41% on higher provisioning

State-run Canara Bank today reported a steep 41 per cent fall in net profit at Rs 479 crore in the quarter to June on higher provisions for bad loans which rose to Rs 1,525 crore from Rs 988 crore a year ago.
The Karnataka-based bank's asset quality worsened with gross non-performing assets (NPA) rising to 3.98 per cent from 2.67 per cent, while its net NPA also rose to 2.74 per cent from 2.03 per cent.
The bank saw Rs 2,519 crore worth of loans becoming NPA in the quarter, taking its provision for NPAs in the quarter to Rs 1,143 crore from Rs 1,125 crore.

Total provisioning for the quarter was Rs 1,525 crore as against Rs 988 crore in the same period last year.
Its write-offs stood at Rs 1,300 crore during the quarter, while upgrades stood at Rs 802 crore and cash recovery at Rs 1,056 crore and restructured accounts stood at Rs 719 crore.
"Net profit squeezed because we had made more provisions for bad loans in the reporting quarter in order to clean the balance sheet so that pressure is not there on the coming quarters," the bank's executive director P S Rawat told reporters here today.

The domestic net interest margin (NIM) declined to 2.35 per cent from 2.42 per cent, while global NIM also came down to 2.21 per cent from 2.30 per cent last year.

Rawat said the bank did not sell any bad loans to asset reconstruction companies in the first quarter but has plans to offload NPAs with asset value of Rs 2,000 crore in this quarter.
"We have started the process to sell NPAs with asset value of Rs 2,000 crore and the book value of around Rs 1,000 crore. By the last week of this month we will try to put them on sale," he said.
Angel Broking's Vaibhav Agrawal termed the numbers below estimates due to higher provisions and said the bank has made required provisions for certain NPAs in the current quarter itself, which it could have amortised over three quarters commencing from Q1 FY16.