Canara Bank's Q4 pre-tax loss widens to Rs 3,334.5 cr as staff costs rise

Drop in NII adds to impact, lender plans to raise 6,000-8,000 cr in capital in FY21

Public sector bank Canara Bank posted a pre-tax loss of Rs 3,334.5 crore for the fourth quarter ended March 31, 2020 (Q4FY20) on a decline in net interest income and higher employee costs.

The lender had posted a pre-tax loss of Rs 2,550 crore in same quarter of 2018-19 (Q4Fy19).

The Bengaluru-based bank posted net loss of Rs 3,259.3 crore in Q4FY20 compared to net loss of Rs 551.5 crore in Q4FY19.

For FY20, it booked net loss of Rs 2,235.7 crore as against net profit of Rs 347 crore for Fy19. These figures pertain to the bank’s standalone performance and do not include those of Syndicate Bank which merged with Bank on April 1, 2020.  

The Canara Bank stock closed 3.9 per cent lower at Rs 109.45 per share on BSE on Wednesday.  

Its net interest income (NII) for reporting quarter declined by 9.35 per cent to Rs 3,319 crore in Q4FY20. The other income consisting of fees, commission etc was up 18.83 per cent at Rs 2,175 crore in Q4FY20.

Employee costs rose to Rs 2,175.2 crore in Q4FY20 from Rs 1,146.9 crore a year ago. Provisions (including for NPAs) and contingencies stood at Rs 5,375.3 crore in Q4FY20 down from Rs 5,523.5 crore in Q4FY19. The provision coverage ratio (PCR) of bank improved to 75.86 per cent at end of March 2020, up from 66.13 per cent in March 2019. Bank expects to improve PCR by 2-3 per cent in Fy21, said managing director and chief executive L V Prabhakar.

Referring to the impact of Covid-19 on operations, the bank said it has made provision of Rs 94.1 crore for loans worth Rs 1,883.4 crore to whom regulatory asset qualification benefit has been extended.

Gross non-performing Assets (GNPAs) declined to 8.21 per cent in Q4FY20 from 8.83 per cent in Q4FY19. Gross NPAs were at 8.36 per cent at end of December 2019 (Q3FY20).

The net NPAs stood at 4.22 per cent in March 2020 down from 5.37 per cent in March 2019. The net NPAs were at 5.05 per cent in December 2019.  

Its deposits rose by 4.4 per cent to Rs 6,25,351 crore in FY20. Bank has guided for growth of 10 per cent in deposits during Fy21. The share of low costs Current Account and Savings deposits (CASA) in domestic deposits stood at 32.59 per cent in March 2020 up from 30.86 per cent in March 2019. The lender expects the CASA ratio to cross 35 per cent by December 2020.

Its advances grew by 1.58 per cent to Rs 4,51,223 crore in March 2020. It is targeting 7-8 per cent growth in loans in Fy21 based on disbursals worth Rs 91,000 crore made in the current quarter (Ending June 2020).

The Capital Adequacy Ratio (CAR) stood at 13.72 per cent as on March 31, 2020 with Tier-I at 10.21 per cent. The bank's board will meet next month to consider proposal to raise Rs 6,000-8,000 crore in capital. It may visit capital market in second half of current financial year to raise equity or tier I bonds, Prabhakar said.