Canara Bank Q3 profit dips 9% YoY to Rs 696cr as provisions rise 61%

Canara Bank’s shares on the BSE closed at Rs 131.15 on Wednesday, down 1.83% from their previous close.

Public sector lender Canara Bank on Wednesday reported a 9% year-on-year (y-o-y) decline in net profit to Rs 696 crore in the December quarter of FY21, with a 61% rise in provisions to Rs 4,686 crore taking a toll on the bottom line. The bank reported a total income of Rs 21,479 crore, up 5.71% YoY.

Net interest income (NII) – the difference between interest earned and that expended – stood at Rs 6,081 crore, up 14.6% YoY. Provisions for the quarter stood at Rs 4,686 crore. Its operating profit rose 46.65% YoY to Rs 5,382 crore. The net interest margin (NIM), a key measure of profitability, fell two basis points (bps) sequentially to 2.8%.Gross non-performing assets (NPAs), as a percentage of total advances, fell 77 bps on a sequential basis to 7.46% and the net NPA ratio declined 78 bps to 2.64%. Slippages during the quarter were to the tune of Rs 395 crore, down from Rs 7,916 crore a year ago, given the impact of the Supreme Court’s stay on recognising bad loans after August 31.

The bank’s management said once the stay was lifted, there could be slippages worth around Rs 10,000 crore on a loan book of about Rs 6.74 lakh crore. The gross NPA ratio will increase by around 150 bps and net NPA ratio may increase by 130 bps. “So the impact will not be huge because even after adding this as on date, we can maintain a net NPA ratio of less than 4% and a gross NPA ratio of less than 9% with a provision coverage ratio of about 80%. So, for Canara Bank, as far as the slippages are concerned, which are going to be in future, are very well under control,” said MD & CEO LV Prabhakar.

He added that the ratio of accounts which availed of the one-time restructuring scheme stood at 20 (retail): 80 (corporates) in value terms. In the retail book, the gross NPA ratio is well below 2% and in housing loans, it was under 1%. In personal loans and vehicle loans, too, bad loans were under 2%. Gross advances of the bank stood at Rs 6.67 lakh crore as on December 31, 2020, with 5.8% y-o-y growth. Total deposits of the bank stood at Rs 9.73 lakh crore as on the same date, up 7.8% y-o-y. The domestic current account savings account (CASA) share improved to 33.41% from 31.8% a year ago.

Canara Bank’s shares on the BSE closed at Rs 131.15 on Wednesday, down 1.83% from their previous close.

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