Provision for investments and bad loans pulled down Canara Bank’s net profit 41 per cent in the first quarter ended June 30, 2015.
The net profit of the public sector bank in the reporting quarter was at ₹479 crore, against ₹807 crore in the year-ago quarter.
Net interest income (the difference between interest earned and expended) edged up 4 per cent year-on-year (yoy) to ₹2,517 crore.
Other income, comprising core non-interest income, treasury income and recovery in written-off accounts, was up 8 per cent at ₹1,113 crore. Provision on investments was at ₹133 crore (against a write-back of ₹416 crore in the year-ago period) and provision on bad loans was at ₹1,314 crore (₹1,125 crore). PS Rawat, Executive Director, said though the RBI permitted the bank to spread the provision in respect of certain bad loans over three quarters beginning June 30, 2015, the bank chose to make it in one go to clean up the balance sheet. Net interest margin (net interest income/ average assets) came down a tad to 2.35 per cent from 2.42 per cent.
While (loan) slippages during the quarter amounted to ₹2,500 crore, Rawat said high-value slippages had been contained. Only one loan of more than ₹100 crore had slipped in the reporting quarter. Year-on-year the gross non-performing assets (GNPAs) rose 60 per cent to ₹13,081 crore. However, due to loan recoveries, upgradation and write-offs, the quarter-on-quarter rise in GNPAs was marginal at ₹41 crore.
Rawat said loan growth in the quarter came from priority sector, retail and MSME (micro, small and medium enterprise) sectors. There was almost no growth in the corporate loan book. However, corporate loans could pick up from the third quarter onwards on the back of financing requirements coming in from the joint lenders forum and capital action plan for corporates, both part of the RBI proposals to revive distressed assets in the economy).
Canara Bank shares closed at ₹303.55 apiece, down 1.89 per cent over the previous close, on the BSE on Wednesday.