Home / Companies / Canara Bank profit rises 6.8%

Mumbai: Bangalore-based Canara Bank, the fifth-largest public sector lender as per asset size, on Tuesday reported a 6.8% increase in first-quarter net profit, its earnings crimped by higher interest and employee costs.

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The bank blamed the business environment for its muted performance.

“General economic slowdown has been impacting business growth, which is continuing to be sluggish at the industry level," it said in a release.

The Indian economy slowed to a growth pace of 5.3% in the quarter ended 31 March, the slowest in nine years. Companies deterred by high borrowing costs and slowing demand have put investments on hold.

At Canara Bank, net interest income—the difference between the interest earned from loans and that paid for deposits—rose in the June quarter by 4.21% to 1,843.54 crore.

Net interest margin, or the difference between the yield on advances and cost of deposits, was almost flat at 2.40% in the quarter ended June, compared with 2.39% in the year-ago quarter.

The bank’s asset quality deteriorated year-on-year.

Gross non-performing assets (NPAs), as a percentage of total advances, were 1.98% against 1.69% in the year-ago quarter. After provisioning, the bad debts made up 1.66% of the advances against 1.33% a year ago.

Total provisions for the quarter amounted to 619 crore, including provisions for NPAs at 477 crore, the bank said. Cash recovery was strong at 594 crore for the quarter.

In fiscal 2013, the bank will focus more on its retail business and plans to open 325 branches. The bank also plans to open branches or representative offices in Johannesburg, Qatar, Frankfurt, New York and Tokyo.

State Bank of Bikaner and Jaipur (SBBJ) reported a 31% rise in its first-quarter net profit on higher interest income even as provisions rose.

Net profit rose to 168 crore in the three months. Net interest income rose 33.21%, while the net interest margin was higher at 3.90% against 3.42% in the year-ago quarter. NPA provisions for the bank rose by a steep 148.72% to 207.78 crore. The gross NPA ratio widened to 3.71% from 2.53% a year ago. After provisioning, the net NPA ratio was at 2.31% against 1.21% a year ago.

Canara Bank lost 1.14% to close at 384.40 on Tuesday on BSE Ltd, while SBBJ gained 1.15% to 372.65. The benchmark Sensex gained 0.24% to close at 16,918.08 points and the banking index, Bankex, rose 0.16% to 11,824.04 points.


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