Canara Bank Q2 Results: Net profit rises 11% YoY to Rs 4,014 crore on lower provisions
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Canara Bank Q2 Results: Net profit rises 11% YoY to Rs 4,014 crore on lower provisions

Lower provisions helped Canara Bank report a 11.3% year-on-year rise in net profit for the September quarter at Rs 4,014 crore, while pre-provision operating profit remained almost flat on a slim rise in net interest income.

The net interest margin for the state-owned lender came under pressure due to a higher cost of deposits. NIM for the quarter was at 2.86% against 3% in the year-ago period.

Operating profit was at Rs 7,654 crore against Rs 7,616 crore over the same period.

Net interest income rose by a mere 4.6% year-on-year to Rs 9,315 crore while total income was 10.3% higher at Rs 34,721 crore.

Total provisions and contingencies were at Rs 3,640 crore, 9.2% lower than what it was in the corresponding period last year.

The bank, however, made 17.5% higher provisions against bad loans of Rs 2,587 crore.”We have made additional provisions to improve balance sheet while the NIM was lower due to the burden of higher cost ofdeposits” managing director K Satyanarayana Raju said.The bank’s cost of deposits for the quarter rose to 5.7% as compared with 5.35% a year back while yield on advances rose to 8.77% from 8.56%.

Canara’s asset quality improved with gross non-performing assets ratio falling to 3.73% at the end of the September quarter from 4.76% a year ago. Net NPA ratio improved by 42 basis points to 0.99%. Provision coverage ratio was at 90.89%, improved by 216 bps while slippage ratio fell 32 bps to 1%.

Its gross advances rose 9.5% year-on-year to Rs 10.12 lakh crore at the end of September quarter while deposit rose by 9.3% to Rs 13.47 crore.

Raju said the bank is opening 250 branches this year keeping an eye on mobilising the low cost current and savings account deposits. The bank has 9614 branches before this financial year.

On Canara Robeco Asset Management Company, he said the subsidiary is expected to issue its initial public offering in the fourth quarter.

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