State-owned Corporation Bank on Wednesday reported a rise of 26 per cent in its net profit to Rs 129.76 crore for the second quarter ended September 30, on the back of lower provisioning for bad loans.
The bank had posted a net profit of Rs 103.01 crore in the corresponding quarter of 2018-19.
Its total income also rose to Rs 4,712.97 crore in the second quarter of 2019-20 from Rs 4,216.79 crore in the corresponding quarter of 2018-19, the bank said in a regulatory filing.
The lender's asset quality witnessed improvement as the gross non-performing assets (NPAs) fell to 15.43 per cent (Rs 20,822.83 crore) of the gross advances at the end of September 2019, compared with 17.46 per cent (Rs 21,714.16 crore) by the year-ago period.
Net NPAs or bad loans fell substantially to 5.59 per cent (Rs 6,751.20 crore), against 11.65 per cent (Rs 13,534.01 crore) a year ago.
This resulted into lesser provisioning for bad loans and contingencies for the quarter at Rs 789.45 crore from Rs 808.32 crore a year ago. Of this, provisioning for bad loans was Rs 658.09 crore, down from Rs 728.56 crore a year ago.
The bank said it carried a provision of Rs 28.32 crore as on September 30, which is 5 per cent of outstanding food credit availed by the Punjab government, as per the Reserve Bank of India.
Further, the bank said it continues to hold provisions additionally made as of March 31 in respect of eligible National Company Law Tribunal (NCLT) accounts, those under NPA category as well as for under standard assets accounts.
"The bank has reversed deferred tax assets of Rs 119.36 crore, during the half year ended 30th September, 2019. On 20th September, 2019, vide Taxation Laws (Amendment) Ordinance 2019, the Government of India inserted Section 115BAA in the Income Tax Act 1961, which provides domestic companies a non-reversible option to pay corporate tax at reduced rates effective 1st April, 2019 subject to certain conditions," the lender said.
It also added that the bank is currently in the process of evaluating this option.
Corporation Bank continues to recognise the taxes on income for the quarter and the half year ended September 30, 2019, as per the earlier provision of tax laws.
Provision coverage ratio of the bank as of September 30 was 83.95 per cent, compared to 65.47 per cent a year ago.
Shares of Corporation Bank on Wednesday closed at Rs 18.50 on the BSE, up 7.25 per cent from the previous close.