Higher provisioning during the quarter caused a 21 per cent dent in net profits for Canara Bank during the third quarter of this fiscal. The bank posted net profits of Rs 876 crore.
“Our profit would have been higher but for two reasons. One major account was restructured, and we had to provide Rs 150 crore for impairment of fair value; and because of spike in government yields, we had to provide Rs 185 crore for depreciation on investments,” said Mr S. Raman, Chairman and Managing Director, Canara Bank.
Despite the bank's interest income going up 33 per cent, its interest expenditure was up almost 56 per cent, impacting the bank's net interest income, which was down 8 per cent.
However, Mr Raman said that the bank had good cash recoveries this quarter too. “We have increasingly been successful in recovering, with recoveries during the first nine months at Rs 2,346 crore, compared with the full-year's cash recovery of Rs 2,032 crore last year,” he pointed out.
Higher NPAs
Non-performing assets have gone up, he said, adding that the bank has “embarked on addressing the NPA issue very aggressively”. According to him, slippages are coming down every quarter. “We have arrested negative aspects of assets, and are very choosy about credit expansion,” he said. Mr Raman pointed out that it has been a very difficult year for the banking system as a whole, and expected the next quarter to be better.
“The sentiments have improved now, and banks like us which were careful in balance-sheet expansion this fiscal, are ideally suited for better growth next year,” said Mr Raman. He, however, did not expect sentiments to take effect in the next couple of months.
On the credit portfolio, he said Canara Bank was not aggressive in expanding its credit portfolio and expected a full-year credit growth of about 16 per cent for FY12. “We felt it was better to grow at an average rate, and it was a time to be conservative. It was not about risk aversion,” said Mr Raman. Net advances of the bank grew 15.5 per cent this quarter.