Canara Bank net profit up 11%

Lesser than expected growth in credit offtake and higher cost of funds has resulted in Canara Bank posting just 11 per cent growth in its net profit at Rs 401.57 crore for the second quarter ended September 30, 2007, compared with the corresponding period of the last financial year.

The cost of deposits went up by 150 basis points to 6.25 per cent during the quarter. The net interest income for the quarter stood at Rs 786.89 crore, a decline of 19.79 per cent compared to the same period last year.

The net interest margin for the quarter dropped to 2.36 per cent compared with 3.15 per cent in the year-ago period. 
 

Rs crore	2006	2007	% chg
Interest earned	2679.95	3482.60	29.95
Other income	313.28	572.06	82.60
Expenditure	2378.05	3404.35	43.16
PBT	615.18	650.31	5.71
Net profit	361.77	401.57	11.00
CAR (%)	12.27	13.89
NPR (%)	13.50	11.53
Source: BSE

"We are fully geared up to make a smooth transition to the new capital adequacy framework under Basel-II norms from March 2008. We have already commenced parallel run. In the medium-term, we will maintain a 12 per cent CRAR according to Basel-II norms," Canara Bank Chairman and Managing Director MBN Rao said.

The bank's total income for the period went up by 36.15 per cent to Rs 4,054.66 crore compared to the same period last year. The rise in net income is boosted by higher other income, which grew by 92 per cent to Rs 572.06 crore during the quarter.

The rise is mainly on account of divestment of 49 per cent stake to Robeco in its asset management company, amounting to Rs 90 crore.

The operating profit for the second quarter grew by 8.40 per cent to Rs 650.31 crore on a y-o-y basis. The bank made a provision of Rs 178.74 crore during the quarter, which is 29.41 per cent higher than the corresponding quarter.

The return on assets (annualised) during the September quarter declined to 0.97 per cent from 1.05 per cent in the corresponding quarter.

The earnings per share (not annualised) rose to Rs 9.79 from Rs 8.82 in the same period last year.

The net non performing assets in September quarter went up to 0.99 per cent from 0.96 per cent last year. The amount of net non performing assets stood at Rs 946.34 crore during the period. The capital to risk weighted assets ratio during the quarter went up to 13.89 per cent compared to 12.27 per cent last year.