Canara Bank's net loss widens to Rs 3,259 cr in Q4 on back of provisioning

State-owned Canara Bank on Wednesday reported widening of its standalone net loss to Rs 3,259.33 crore for the fourth quarter ended March 2020.

The bank had registered a net loss of Rs 551.53 crore during the corresponding January-March 2019 quarter.

However, income on a standalone basis during January-March rose to Rs 14,222.39 crore, compared with Rs 14,000.43 crore in the year-ago period, Canara Bank said in a regulatory filing.

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The lender made a huge provisioning of Rs 5,375.38 crore for the March 2020 quarter, even as it was lower than the Rs 5,523.50 crore parked aside for corresponding period of 2018-19.

For the full year 2019-20, there was a loss of Rs 2,235.72 crore during 2019-20. The public sector bank had posted a net profit of Rs 347.02 crore in 2018-19.

On asset quality, gross non-performing assets (NPAs) continued to remain at an elevated level of 8.21 per cent at the end of March 2020, slightly better than 8.83 per cent by the end of March 2019.

In value terms, the gross NPAs or bad loans of the bank stood at Rs 37,041.15 crore as on March 31, 2020, vis-a-vis Rs 39,224.12 crore in the year-ago period.

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Net NPAs were, however, trimmed substantially to 4.22 per cent (Rs 18,250.95 crore) from 5.37 per cent (Rs 22,955.11 crore).

Provision coverage ratio as on March 31, 2020, stood at 75.86 per cent, compared with 70.97 per cent as on December 31, 2019, and 68.13 per cent as on March 31, 2019, it said.

The amalgamation of Syndicate Bank into Canara Bank was effected on April 1, 2020. In this connection, the Reserve Bank of India, with a view to obviating future build-up of stresses in the bank, advised Canara Bank to ensure a harmonisation provision as on March 31, 2020, with respect to the impact of divergence in asset classification across both the banks, it said.

Accordingly, based on the harmonisation process carried out by Canara Bank, the bank made the changes in asset classification and provisioning as per extant norms as at the year-end.

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"The harmonisation process as above has resulted in increase in gross NPA by Rs 532.63 crore and increase in NPA provision by Rs 340 crore during the year ended on March 31, 2020," Canara Bank said.

Further, the Bengaluru-headquartered lender said it has availed option for deferment of provision in respect of frauds reported for Rs 2,349.59 crore requiring additional provision of Rs 1,989.26 crore in terms of option available as per the RBI circular.

Accordingly, an amount of Rs 497.31 crore has been charged to profit and loss account and an amount of Rs 1,491.95 crore have been charged to reserves and deferred for adjustment in subsequent quarters, it added.

On Covid-19, it said that due to lockdown impact on economy, the situation continues to be uncertain and the bank is evaluating the situation on an ongoing basis.

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"The major identified challenges for the bank would arise from eroding cash flows and extended capital cycles. The bank is gearing itself on all the fronts to meet these challenges. The management believes that no adjustments are required in the financial results as it does not significantly impact the current financial year," it said.

Despite these events and conditions, there would not be any significant impact on the bank's results in future and going concern assumptions as at presently made, it added.

Shares of Canara Bank on Wednesday fell 3.95 per cent to Rs 109.45 apiece on the BSE.