Canara Bank Q2 net stays flat on higher provisions

The bank plans to raise Rs 3,000 cr through QIP issue in third quarter

Public sector lender Canara Bank on Thursday said its net profit for the quarter ended September remained flat at Rs 627 crore, compared with Rs 626 crore in the corresponding quarter of the last financial year. Higher provisions made towards non-performing assets during the quarter impacted its net profit.

The total income for the quarter increased 14.2 per cent to Rs 11,915 crore, compared with Rs 10,427 crore in the second quarter of FY14. Its operating profit for the quarter went up 14 per cent to Rs 1,626 crore in the year-ago quarter.

“During this quarter, we have seen fresh slippage to the tune of Rs 3,178 crore. As a result of which, we had to make higher provisions for them. We have provided Rs 814 crore compared to Rs 674 crore in the corresponding quarter. This impacted our net profit during the quarter,” said its Executive Directors Krishna Kumar and P S Rawat.

Provisions were higher by 21 per cent compared to the year-ago period.

The bank’s income from loans/advances increased to Rs 8,005 crore, a year-on-year growth of 14.9 per cent. The non-interest income grew by 32.1 per cent to Rs 1,021 crore. Net interest income for the quarter increased 8.1 per cent to Rs 2,368 crore. Net interest margin improved to 2.36 per cent from 2.33 per cent in the year-ago quarter.

However, the return on assets continued to decline and stood at 0.51 per cent compared to 0.58 per cent a year ago. The net non-performing assets increased 11 per cent to Rs 7,170 crore in the second quarter compared to Rs 6,459 crore in the year-ago quarter.

Capital adequacy ratio as per Basel-III norms stood at 10.19 per cent. CET ratio at 7.13 per cent and Tier-I ratio at 7.41 per cent. “We have adequate headroom available to raise capital to support business growth momentum. We have received all approvals from the government to raise Rs 3,000 crore through a QIP issue during the third quarter,” Kumar said.