Canara Bank reported a nearly three-fold jump in its net profit to ₹1,177 crore in the quarter ended in June helped by a dip in the provision for bad loans
State-run Canara Bank on Tuesday reported a nearly three-fold jump in its net profit to ₹1,177 crore in the quarter ended in June helped by a dip in the provision for bad loans.
The bank had reported a profit after tax (PAT) of ₹406 crore in the year-ago quarter. Total income in the April-June increased marginally to ₹21,210.06 crore, from ₹20,685.91 crore in the year-ago period. Net interest income rose by 0.84% to ₹6,147 crore in April-June 2021-22 from ₹6,096 crore in the same quarter of the previous fiscal.
The bank's non-interest income grew by 67.47% to ₹4,438 crore in the reporting quarter compared to ₹2,650 crore last year. Net interest margin (NIM) declined to 2.71% in the quarter from 2.84% in the year-ago quarter.
Gross non-performing assets (GNPA) ratio stood at 8.50% as against 8.84% as of June 2020. Net non-performing assets (NNPA) ratio was at 3.46% compared to 3.95%.
Provision Coverage Ratio (PCR) improved to 81.18% from 78.95% last year same period.
Bank's total provision increased by 17.89% to ₹4,574 crore from ₹3,880 crore. However, provision for non-performing loans (NPAs) dipped by 34.23% to ₹2,335 crore from ₹3,550 crore in the same quarter of the previous fiscal.
Fresh slippages during the quarter were at ₹4,253 crore. Of the total slippages, 18-19 per cent came in from the retail sector and around 55-66 per cent from the MSME segment.
The bank's managing director and CEO L V Prabhakar told reporters that the collection efficiency has reached to 91% as on June 30, indicating borrowers have started repaying.
“There was stress which was duly addressed by giving borrowers facilities under the resolution process and restructured under the Resolution 2.0 framework. This gave borrowers some breathing time and now they have started their businesses. Going forward, the stress should not be more than ₹4,000-4,500 crore in the coming quarter (Q2)," he said.
The lender expects fresh slippages of ₹14,000-15,000 crore during the entire fiscal.
Under the RBI's Resolution Framework 2.0 for COVID-19, the lender has restructured 3.51 lakh accounts worth ₹13,234 crore. Post these restructuring, the bank has received about ₹64 crore of payments into the account and ₹35 crore as pre-payment, he said.
“We are of the opinion that restructuring of retail, MSME, and small business has helped a lot to our borrowers and we are hopeful that in the coming two to three months there will be more and more borrowers who will be repaying the instalments even though they are not due," Prabhakar said.
Cash recovery in the quarter stood at ₹1,598 crore and the bank upgraded ₹2,292 crore of loans.Prabhakar said at the start of fiscal 2021-22 the bank had given a recovery target of ₹10,000 for the full year, but the number will be achieved much before March-end.
Capital to risky asset ratio (CRAR) stood at 13.36% as of June 2021. Out of which tier-I was 10.34% and tier-II at 3.02%. Domestic deposit grew by 11.6% to ₹9,70,481 crore gross domestic advances rose by 5.94% to ₹6,61,236 Cr as at June 2021. The bank expects a credit growth of 7.5% in FY22.
Speaking on National Asset Reconstruction Company Ltd (NARCL), it's executive director Debashish Mukerjee said the bank's board has approved an investment of 12% in the bad bank.
“The board of NARCL has been formed and one of our CGMs has been inducted as the board of directors of NARCL. We are in the process of finalising what accounts are to be transferred," he said.
He said NARCL is yet to receive a license from the regulator RBI.Prabhakar said the bank will soon begin the process to raise ₹2,500 crore through qualified institutional placement (QIP) route.
The bank's scrip ended at ₹148.80 apiece, up 1.47% on BSE.
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