 "Canara Bank Q3 results: Net profit up 12.25% on non-interest income boost")
Public sector lender Canara Bank’s net profit rose by 12.25 per cent year-on-year (Y-o-Y) to Rs 4,104 crore during the third quarter ended December 2024 (Q3FY25), aided by non-interest income, including treasury gains, which grew by a healthy 35.1 per cent.
Sequentially, the Bengaluru-based lender’s net profit rose by 2.14 per cent from Rs 4,014 crore in the September quarter of 2024 (Q2FY25).
Canara Bank’s share price closed 5.06 per cent lower at Rs 91.85 per share on the BSE.
Net interest income (NII) shrank by 2.85 per cent Y-o-Y to Rs 9,149 crore in Q3FY25 compared to Rs 9,417 crore in the year-ago quarter, reflecting pressure on deposit mobilisation. Its cost of deposits rose to 5.72 per cent in Q3FY25 from 5.42 per cent in Q3FY24. However, the rise in yield on advances was slower, at 8.79 per cent compared to 8.6 per cent in Q3FY24. In tandem with pressure on NII, its net interest margin (NIM) moderated to 2.83 per cent in Q3FY25 from 3.02 per cent a year ago.
K S Raju, its managing director and chief executive officer, in a post-results virtual media interaction, said the NII would not see further decline and is expected to grow steadily. NIM is under stress due to challenges in deposit mobilisation. The rates on bulk deposits are touching 8 per cent levels. As a consequence, the bank is lowering its guidance for NIM and expects it to stabilise at 2.8 per cent for FY25. Earlier, it had guided for 2.9 per cent for FY25.
The non-interest income, covering fees, commissions, treasury revenues, and recoveries, rose by 35.1 per cent Y-o-Y to Rs 5,802 crore. Out of this, treasury income grew by 147.7 per cent Y-o-Y to Rs 1,226 crore in Q3FY25. Fee-based income was up by 23.31 per cent Y-o-Y to Rs 2,185 crore. Recovery from written-off accounts improved by 21.33 per cent Y-o-Y to Rs 2,008 crore.
The lender’s provisions for non-performing assets (NPAs) declined to Rs 1,981.8 crore in Q3FY25 compared to Rs 2,106.9 crore in Q3FY24. The asset quality profile improved, with gross NPAs declining to 3.34 per cent at the end of December 2024 from 4.39 per cent at the end of December 2023. Net NPAs also declined to 0.89 per cent in Q3FY25 from 1.32 per cent in Q3FY24. The provision coverage ratio (PCR), including written-off accounts, stood at 91.26 per cent in December 2024 compared to 89.01 per cent a year ago.
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BOI's advances grew by 10.45 per cent Y-o-Y to Rs 10.5 trillion in Q3FY25. Retail advances grew by 35.5 per cent Y-o-Y to Rs 1 trillion in Q3FY25.
Total deposits increased by 8.44 per cent Y-o-Y to Rs 13.7 trillion. The share of low-cost deposits — current account and savings account (CASA) — declined to 30 per cent in Q3FY25 from 31.65 per cent a year ago.
Canara Bank has guided for 10.5 per cent Y-o-Y growth in advances and 8.5 per cent in deposits.
The bank’s capital adequacy stood at 16.44 per cent, with Common Equity Tier-1 (CET-1) at 11.97 per cent at the end of December 2024. The bank has approval to raise Rs 8,500 crore in debt capital (Additional Tier-I: Rs 4,500 crore and Tier-II: Rs 4,000 crore) in FY25. It raised Rs 3,000 crore by issuing AT1 bonds in August. It may raise the balance amount (Rs 1,500 crore) through AT1 bonds if market conditions are conducive, Raju added.