Canara Bank Q2 net up 32%

Bangalore-based and India’s second largest public sector lender, Canara Bank, on Monday reported a robust 31.8 per cent rise in net profit at Rs 529 crore for the second quarter ended September 2008 compared to the corresponding quarter last financial year.

The rise in profit was mainly attributed to a 46 per cent growth in the net interest income for the second quarter which stood at Rs 1,149 crore compared to the same a year ago and lower cost of deposits.

The bank’s total income, however, grew by just 9.7 per cent to Rs 4,447.97 crore compared to the same quarter last year. Operating profit for the quarter grew by 19 per cent to Rs 774 crore.
 

THE STORY THIS QUARTER Performance during July-September
Rs crore	2007	2008	% chg
Interest earned	3482.60	4106.20	17.91
Other income	572.06	338.77	-40.78
Expenditure	3404.35	3674.45	7.93
PBT	650.31	773.52	18.95
Net profit	401.57	529.43	31.84
CAR (%)	13.89	13.21	–

 

The bank’s cost of deposits were contained at 6.60 per cent during the first half of the year compared to 6.77 per cent in the same period last year. The net interest margin has improved to 2.70 per cent in the second quarter as against 2.36 per cent in the year ago period.

However, the bank’s profits would have been higher but for the drop in other income, which stood at Rs 338.77 crore, a decline of 40.78 per cent compared to the same period a year ago.

“During the second quarter last year we had earned some extra-ordinary income from Robeco which picked up stake in our mutual fund business and HSBC had paid extra premium in the insurance joint venture,” D L Rawal, executive director, Canara Bank said.

The bank’s fee-based income rose by 16.4 per cent to touch Rs 617 crore. The rise in profit was partly boosted by the lower provisions and contingencies during the quarter. The bank showed a provision of Rs 144.09 crore, a drop of 19.3 per cent compared to the second quarter last year.

“The rise in net interest income has been the engine of our growth in the second quarter. We have shown substantial rise of 16 per cent in our fee-based income,” A C Mahajan, Canara Bank Chairman and Managing Director said.

Return on assets (annualised) has shown improvement to 1.13 per cent in the quarter ending September 2008 compared to 0.97 per cent in the same period last year. Earnings per share (not annualised) improved to Rs 12.91 compared to Rs 9.79 in the quarter ending September 2007.

Capital adequacy ratio marginally declined to 13.21 per cent compared to 13.89 per cent in the year ago period. The percentage of net non-performing assets dropped marginally to 0.89 per cent compared to 0.99 per cent.

The bank’s global business grew by 21 per cent to Rs 290,824 crore for the first half ended September 30, 2008 compared to the same period last year.

For the current financial year, the bank has revised its target to Rs 315,000 crore comprising deposits of Rs 185,000 crore and advances of Rs 130,000 crore.

Mahajan said the bangalore headquartered bank will look at a possibility of raising upto Rs 1,000 crore during the remaining part of the year to shore up its Tier-II capital, depending on the suitable market conditions.