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Canara Bank Q2FY24 result: Net profit rises 42.8% at Rs 3,606 crore

Healthy NII growth, stable asset quality props up bottom-line

Canara Bank

Abhijit Lele Mumbai

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Canara Bank’s net profit for the quarter ended September (Q2FY24) grew 42.8 per cent year-on-year (Y-o-Y) to Rs 3,606 crore, thanks to a substantial rise in net interest income (NII) and stable asset quality.

Sequentially, the public-sector lender’s profit went up 2.01 per cent from Rs 3,535 crore in the quarter ended June (Q1FY24).

Its stock closed 1.8 per cent higher at Rs 359.85 a share on BSE. Its Capital adequacy ratio (CAR) stood at 16.2 per cent, with Tier-1 at 13.6 per cent at the end of September.
 
K Satyanaranaya Raju, its managing director and chief executive, the present CAR is well above expectation of markets (14 per cent). Bank has approval to raise upto Rs 7.500 crore through Additional Tier I and tier II bonds and will raise capital at right opportunity subject to market conditions.
 
NII expanded 19.76 per cent to Rs 8,903 crore in Q2FY24, compared to Rs 7,434 crore in the same quarter a year ago. Sequentially, NII rose by 2.73 per cent from Rs 8,666 crore in Q1 of FY24.

The bank’s net interest margin (NIM) expanded to 3.02 per cent in Q2FY24, compared to 2.83 per cent in Q2FY23. Sequentially, NIM moderated from 3.05 per cent in Q1FY24, according to an analyst presentation. The bank has guided for NIM to be about 3.05  per cent for FY24.

However, MD& CEO said there is pressure on liquidity and if that situation continues, NIM may be between 2.90 to 3.05 per cent.  

Non-interest income comprising fees, commissions, treasury income and recoveries declined by 3.94 per cent YoY to Rs 4,635 crore. Sequentially, it declined marginally from Rs 4,819 crore in Q1FY24.

The lender’s provisions for non-performing assets (NPAs) declined to Rs 2,200 crore in Q2, from Rs 2,745 crore in the year-ago period. Sequentially as well, provisions declined from Rs 2,417 crore in Q1FY24.

Advances grew 12.11 per cent YoY to Rs 9.23 trillion in Q2FY24. The retail, Agriculture and MSME Credit grew by 13.63 per cent to Rs 5.16 trillion, accounting for 56 per cent of total Advances, the bank said in a statement.

It expects to grow its loan book by 10.5 per cent in the current financial year.

Total deposits increased 8.66 per cent YoY to Rs 12.32 trillion. The share of low-cost deposits — current account and saving account (CASA) — was 32.15 per cent at the end of September, down from 34.02 per cent a year ago.

The asset quality profile improved, with gross NPAs declining to 4.76 per cent in September from 6.37 per cent a year ago. Sequentially, it was down from 5.15 per cent in June 2023.

Net NPAs declined from 1.41 per cent in September to 2.19 per cent in the year-ago month. Sequentially, net NPAs were up from 1.57 per cent in June 2023.

The provision coverage ratio improved to 88.73 per cent in September from 85.36 per cent a year ago.

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First Published: Oct 26 2023 | 3:16 PM IST

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