Canara Bank's net profit rises 28% to Rs 5,070 crore in Q4

BENGALURU/MUMBAI: Canara Bank reported a net profit of Rs 5,070 crore for the March quarter, an increase of 28% over Rs 3,951 crore in the corresponding quarter last year. The bank's board also proposed a dividend of 200% or Rs 4 per share with a face value of Rs 2.

"The increase in profit was because of the growth in other income coupled with some recoveries," said the bank's MD & CEO, Satyanarayana Raju. The bank's global business crossed the Rs 25 lakh crore milestone, reaching Rs 25.3 lakh crore at the quarter's end. Shares of the bank were up 1.8% even as the broader BSE Sensex dipped 0.5%.

Global deposits and advances grew 11% and 11.74% respectively, to Rs 14.6 lakh crore and Rs 10.7 lakh crore. Despite the increase in loans, the net interest income dipped 1.4% to Rs 9,442 crore from Rs 9,580 crore a year ago. The bank said that the dip in net interest income was because of margins coming under pressure in the wake of the interest rate cut, which resulted in the net interest margin declining to 2.8% from 3.05% a year ago.

"We expect our loans to grow at 10-11% during the current financial year. In addition to demand from the infrastructure segment, we are expecting credit demand to grow from core industries that support infrastructure as well as businesses like data centres. Even if the GDP growth is 6.25% or 6.5%, achieving 10% credit growth is not going to be difficult. We do not think any slowdown in the economy will impact our loans. We do not give any unsecured loans other than to those pensioners who draw their pension from us," said Raju.

The bank's non-interest income rose 21.7% to Rs 6,351 crore in the quarter, supported by a 30% jump in recoveries from written-off accounts to Rs 2,471 crore. Treasury income also increased 15% to Rs 995 crore. Fresh slippages declined to Rs 2,655 crore, while the gross NPA ratio improved to 2.94% from 3.34% in the previous quarter. Total provisions dropped to Rs 1,831 crore from Rs 2,483 crore a year earlier. However, provisions for NPAs rose to Rs 2,849 crore from Rs 2,282 crore. In contrast to a Rs 295 crore provision for non-performing investments last year, the bank recorded a Rs 1,334 crore write-back this year, which supported profits.

Currently, 44% of its loan book is linked to the external benchmark, allowing for immediate repricing with repo rate changes. The bank also plans to lower gross NPAs further to 2.5% in the new fiscal year. Raju said that the sharp jump in personal loans was due to the shift of rural loans that were secured by gold loans to gold loans. While the repositioning would bring down the surplus priority sector loan, Raju said that he expected commissions on priority sector loans to rise and the margins on gold loans would be more than loans classified as agri advances.

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