Canara Bank's Q1 net rises 10.5% to Rs 3,905 cr; NII expands 5.7%

NIMs under pressure; dip by 15 bps to 2.90%

Canara Bank’s net profit during the quarter ended June 30 (Q1FY25) grew by 10.5 per cent year-on-year (YoY) to Rs 3,905 crore backed by non-interest income like fees and recoveries. It had posted a net profit of Rs 3,535 Crore in the quarter ended June 2023 (Q1Fy24).

Sequentially, the Bengaluru-based public-sector lender’s profit increased 3.94 per cent from Rs 3,757 crore in the quarter ended March 2024 (Q4 of FY24). Its stock was trading 0.53 per cent higher at Rs 113.1 share on BSE.

NII expanded 5.77 per cent to Rs 9,166 crore in Q1 of FY25 against Rs 8,666 crore in the same quarter a year ago. Sequentially, NII declined by 4.32 pr cent from Rs 9,580 crore in Q4FY24, according to an analyst presentation filed with BSE.

Net interest margin (NIM) moderated by 15 basis points (bps) to 2.9 per cent in Q1 of FY25 against 3.05 per cent in the quarter ended June 2023 (Q1Fy24). Sequentially, it fell from 3.07 per cent in Q4Fy24.

In post result virtual media interaction, K. Satyanarayana Raju, the bank’s managing director and chief executive said, the incremental cost of deposits has risen. The NIM is expected to gradually increase in coming quarters to 2.95-3.0 per cent in Fy25.

While non-interest income rose by 10.38 per cent YoY to Rs 5,319 crore, sequentially it rose marginally from Rs 5,217 crore in Q4FY24. Fee-based income was up 16.75 per cent YoY to Rs 1,910 crore. Commissions and exchanges rose 34.2 per cent YoY to Rs 353 crore. The recoveries from written-off accounts grew 45.48 per cent YoY to Rs 1,158 crore. However, the treasury income fell by 6.16 per cent to Rs 503 crore.

The lender’s provisions for non-performing assets (NPAs) declined from Rs 2,417.6 crore in Q1 of FY24 to Rs 2,170.8 crore in Q1 of FY25. Sequentially, they also fell marginally from Rs 2,279.8 crore in Q4FY24.

As a prudent measure, the bank has made a provision of Rs 560 crore for the central public sector unit account which is showing signs of stress, but has not become NPA, Raju said. He, however, declined to elaborate on the account saying many other lenders are involved.  

Advances grew 9.86 per cent YoY to Rs 9.75 trillion in Q1 of FY25. Retail lending Portfolio increased by 23.54 per cent YoY to Rs 1.75 trillion as at end of June 2024, bank said in a statement.

Total deposits increased 11.97 per cent YoY to Rs 13.35 trillion at the end of June 2024. The share of low-cost deposits — current account and savings account (CASA) — declined to 30.98 per cent at the end of June 2023 from 33.0 per cent a year ago.

The asset quality profile improved, with gross NPAs declining to 4.14 per cent in June 2024 from 5.15 per cent in June 2023. Net NPAs also declined to 1.24 per cent in June 2024 from 1.57 per cent a year ago.

The provisioning coverage ratio (PCR) including written off accounts improved to 89.22 per cent in June 2024 from 88.04 per cent in June 2023.

 Canara Bank’s capital adequacy ratio stood at 16.38 per cent with common equity tier-1 (CET1) capital at 12.05 per cent at the end of June 2024.

The bank has no plans to raise equity capital. It already has a board approved plan to raise upto Rs 8,500 crore through At1 and tier II bonds in the current financial year. Also, the bank may get additional capital through sale of stake in life insurance and mutual fund subsidiaries, Raju added.