Canara Bank on Thursday reported a 7.7 per cent drop in net profit — at Rs 829 crore — for the fourth quarter ended March 31, 20112, compared with Rs 899 crore in January-March of last financial year. Total income grew 23 per cent to Rs 9,037 crore during the quarter as against the year-ago period.
The operating profit for the fourth quarter was also down 12 per cent to Rs 1,491 crore as against Rs 1,694 crore reported in the corresponding quarter last financial year.
“Our net profit has declined mainly due to higher cost of deposits, which moved up to 7.35 per cent in the fourth quarter of 2011-12 as compared to 5.80 per cent in the corresponding quarter last year,” said S Raman, chairman and managing director of Canara Bank.
The rise in cost of deposits was more than the rise in yield on advances. The yield on advances moved up to 10.93 per cent as against 9.73 per cent in the fourth quarter last year.
“As a result, our net interest margin was squeezed,” he added.
Raman said the net interest income was muted, and grew marginally by 3.3 per cent to Rs 2,040 crore as against Rs 1,973 crore in the year-ago period.
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The net interest margin dropped to 2.61 per cent from 3.19 per cent in March quarter last year. The bank also decided to consolidate its asset portfolio rather than focus on credit growth, he said.
However, the provisions were lower by 16.8 per cent at Rs 662 crore, including non-performing assets during January-March, as against Rs 796 crore provided in the fourth quarter of 2010-11.
The bank’s return on assets declined to 0.90 per cent as against 1.27 per cent in the fourth quarter last year. The percentage of net non-performing assets also went up to 1.46 per cent as against 1.10 per cent in the year-ago period. The capital adequacy ratio declined to 13.76 per cent as against 15.38 per cent in the corresponding quarter of FY11.
The 1906-founded bank was nationalised in 1969.