Mumbai: State-run Canara Bank posted a sharp surge in April-June net profit on higher loan growth during the quarter, its top official said on Wednesday.
Net profit for the quarter soared to Rs5.55 billion in the first quarter, up from Rs1.22 billion a year ago.
“Loans of the bank rose 28% in the quarter helping profits to rise,” A.C. Mahajan, chairman and managing director, told television channel ET Now.
Indian bank loans have slowed from around 27% in November 2008 to 15.8% in July, partially recovering to 16.3% as on 3 July, Reserve Bank of India data showed.
Infrastructure loans rose 53.3% on year aiding growth, while that to small businesses rose 23%, the bank said in a statement.
The bank maintained net interest margin at 2.7% in the quarter despite the southward movement in interest rates, Mahajan said.
“Profits were up mostly because of lower base,” Alpesh Mehta, analyst with Motilal Oswal, said.
Provisioning was down to Rs4.86 billion, from Rs5.80 billion a year ago. The year-ago figure included provisioning for marked-to-market losses, making it higher, Mehta said, adding treasury profits were not much in the current quarter. Its restructured assets as on 30 June was worth Rs51.90 billion. Net non-performing assets rose to 1.29%, from 0.85% a year ago owing to slippages in some letters of credit, Mahajan said.
The bank, in which the government has 73.2%, has a capital adequacy ratio of 13.59% as on 30 June.
The Bangalore-based bank expects growth in agriculture lending with monsoons picking up in India, Mahajan said.
The bank is also stressing on loan growth in infrastructure, housing and auto loans. “We will fine tune our retail strategy and stress on growth in housing and auto loans.”
“Rates are expected to remain at same levels in the next 6-9 months,” Mahajan said referring to lending rates.
Shares in the bank fell 2.08% at Rs263.35 in the Mumbai market that was down 1.46%.