Canara, UBI, Central Bank see 2-digit rise in net due to higher NII growth

Three state-owned banks, which declared their July-September (Q2FY23) earnings on Thursday reported double-digit growth in their net profit, aided by higher net interest income (NII), which came on the back of healthy growth in advances. Their asset quality also showed sharp improvement as both gross non-performing assets (GNPAs) and net NPAs of the bank declined on a year-on-year (YoY) and sequential basis.

Bengaluru-based Canara Bank reported an 89 per cent jump in its net to Rs 2,525 crore in Q2, compared with Rs 1,333 crore net profit in the year-ago period. The bank said it has shifted to a new tax regime, resulting in a deferred tax reduction of Rs 2,451 crore.

NII of the lender grew 18.5 per cent year-on-year (YoY) to Rs 7,434 crore, while non-interest income grew 13 per cent YoY to Rs 4,825 crore in the same period. Net interest margin (NIM), a measure of profitability, of the bank stood at 2.86 per cent compared with 2.78 per cent in the previous quarter.

Its GNPAs dropped 205 basis points (bps) on a YoY basis and 61 bps sequentially to 6.37 per cent as of September quarter and net NPAs dropped 102 bps YoY and 29 bps sequentially to 2.19 per cent.

“We have said our credit growth will be 8 per cent YoY but it is growing at 20 per cent YoY. We will be seeing a very decent double-digit growth in credit offtake. Retail, agriculture, MSME, and corporate segments will be seeing double-digit growth. In Canara Bank, 55 per cent of our portfolio is retail, agriculture, and MSME, and the rest is corporate,” said L V Prabhakar, MD & CEO, Canara Bank.  

Union Bank of India saw its net profit rise 21.07 per cent YoY to Rs 1,848 crore in Q2FY23 and its NII was up 21.61 per cent YoY to Rs 8,305 crore. NIMs improved to 3.15 per cent in Q2FY23 from 2.95 per cent in Q2FY22. The lender’s non-interest income dipped 17.65 per cent YoY to Rs 3,276 crore during the quarter under review.

The bank's loan book grew 21.92 per cent YoY, at a much higher rate than the banking system's pace of loan book expansion (16.4 cent YoY) in September 2022.

Central Bank of India, which recently came out of the Reserve Bank of India’s prompt corrective action (PCA) framework, saw its net profit rise 27.2 per cent YoY to Rs 318 crore in Q2. Its NII rose 24.52 per cent to Rs 2,747 crore.

NIMs of the bank improved to 3.44 per cent in Q2 compared to 2.97 per cent in the year-ago period. GNPAs of the state-owned lender have seen a sharp improvement to 9.67 per cent in Q2 from 15.52 per cent in the year-ago period. Similarly, net NPA improved to 2.95 per cent during the same period from 4.51 per cent.