CanBank Q4 net up 2.3% to Rs505 crore on back of loans

CanBank Q4 net up 2.3% to Rs505 crore on back of loans
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First Published: Wed, May 02 2007. 09 29 PM IST

Lending spree: Banks in India gave 28% more loans to companies in the 12 months to 30 March
Lending spree: Banks in India gave 28% more loans to companies in the 12 months to 30 March
Updated: Wed, May 02 2007. 09 29 PM IST
Mumbai: Canara Bank Ltd, India’s third-biggest state-run lender by assets, on 2 May said fourth-quarter profit rose 2.3% on rising demand for loans.
Net profit rose to Rs505 crore in the three months ended 31 March, compared with Rs494 crore a year earlier, the Bangalore-based lender said in a statement to the Bombay Stock Exchange (BSE). That’s higher than Rs363 crore profit estimated by five analysts surveyed by Bloomberg.
Banks in India gave 28% more loans to companies in the 12 months to 30 March, according to data posted on the website of the central bank. That followed from more than 35% loan growth in the year ended March 2006 and a year earlier. Loans during the quarter grew 24%, chairman M.B.N. Rao said in Bangalore.
Lending spree: Banks in India gave 28% more loans to companies in the 12 months to 30 March
“Canara Bank has been prudent and that’s why our credit growth is only 24%,” said Rao. “This year also we note that credit growth cannot exceed 24%.”
Canara Bank’s interest and non-interest income combined rose to Rs3,837 crore, compared with Rs2,786 crore a year earlier. Non-interest income rose to Rs626 crore from Rs396 crore. The Bangalore-based bank set aside Rs497 crore in the quarter to 31 March as provision and contingencies, compared with Rs299 crore a year earlier.
The bank provided Rs102 crore for bad loans, down from Rs306 crore a year earlier. Its net non-performing assets fell to 0.94% of the total loans compared with 1.12% a year earlier. Canara Bank is looking to acquire a bank in either northern India or in the western region, said Rao.
“Consolidation is in the best interest of banks,” he said. “Banks need to be large, huge and big”, as competition from overseas banks increases and as companies and infrastructure projects seek large loans.
The bank has no immediate plans to sell shares to raise money. Its capital adequacy, a key measure of a bank’s financial strength and expressed as a ratio of its capital to risk weighted assets, rose to 13.5% as of 31 March from 11.22% a year earlier.
Net interest margin, or the difference between what it earned on loans and paid for deposits, declined to 3.15% from 3.36%.
It provided Rs50 crore for tax in the fourth quarter compared with a write-back of Rs40 crore a year earlier, the bank said in an email.
Canara Bank’s shares, which declined 21% since 1 January, fell Rs3.6, or 1.6% to Rs217.65 on BSE on April 30. Banks and markets were shut on 1 May and 2 May for festival holidays.
Chitra Somayaji in Bangalore contributed to this story.
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First Published: Wed, May 02 2007. 09 29 PM IST