Canara Bank's Q2FY25 results: Net profit up 11.31% at Rs 4,014 crore

Guides for pressure on margin for two quarters

Canara Bank’s net profit during the second quarter of 2024-25 (Q2FY25) rose 11.31 per cent year-on-year (Y-o-Y) to Rs 4,014 crore amid pressure on net interest margins.

 

Sequentially, the Bengaluru-based lender’s net profit rose 2.79 per cent from Rs 3,905 crore in June 2024 (Q1FY25).

 

Its stock closed 3.03 per cent higher at Rs 103.7 per share on the BSE on Friday.

 

Canara Bank’s net interest income (NII) expanded by 4.63 per cent Y-o-Y to Rs 9,315 crore in Q2FY25, up from Rs 8,903 crore in the same quarter a year ago.

 

The net interest margin (NIM) moderated by fourteen basis points to 2.88 per cent in Q2FY25, compared to 3.02 per cent in Q2FY24. Sequentially, the NIM declined by eight basis points (bps) from 2.90 per cent in Q1FY25.

 

 

K S Raju, managing director and chief executive, said the tight conditions for cost of funds will continue, and yield on advances has peaked. The cut in policy repo rate would impact 41 per cent of the loan book, which is linked to the external benchmark. NIM will remain under pressure for one to two quarters, he said in a post-result media interaction on a virtual platform.

 

The bank’s non-interest income rose 7.46 per cent Y-o-Y to Rs 4,981 crore. Of this, treasury income grew by 50.77 per cent to Rs 885 crore, and fee-based income expanded by 17.68 per cent Y-o-Y to Rs 2,436 crore. Recovery from written-off accounts declined by 26.12 per cent Y-o-Y to Rs 1,191 crore in Q2FY25, according to the analyst presentation.

 

The lender’s provisions for non-performing assets (NPAs) rose to Rs 2,586 crore in Q2FY25, up from Rs 2,200 crore in Q2FY24.

 

The asset quality profile improved with gross NPAs declining to 3.73 per cent in September 2024 from 4.76 per cent in September 2023.

 

Net NPAs declined from 1.41 per cent in September 2023 to 0.99 per cent in September 2024.

 

The provision coverage ratio (PCR), including written-off accounts, stood at 90.89 per cent in September 2024, compared to 88.73 per cent a year ago.

 

Advances grew 9.53 per cent Y-o-Y to Rs 10.11 trillion in Q2FY25. Retail advances went up 31.27 per cent Y-o-Y to Rs 1.94 trillion in September 2024. The loan book is expected to grow at 10 per cent, with corporate lending of 9–10 per cent in FY25, Raju said.

 

Deposits increased by 9.34 per cent Y-o-Y to Rs 13.47 trillion. The share of low-cost deposits—current account and savings account (CASA)—in the domestic business moderated to 31.27 per cent in September 2024 from 32.15 per cent a year ago.

 

The bank’s capital adequacy ratio stood at 16.57 per cent, with Tier-I at 14.64 per cent at the end of September 2024.

 

While capital adequacy is comfortable, the bank has approvals in place to raise up to Rs 8,500 crore in debt capital. Of this, it has already raised Rs 3,000 crore through Additional Tier-I bonds. It would consider raising up to Rs 4,000 crore through Tier-II bonds if market conditions are conducive, Raju said.