Canara Bank Q4 net down 7.7% as expenses mount

Hit by a 12 per cent dip in operating profits, Canara Bank's net profit was down 7.76 per cent to Rs 829.09 crore in the fourth quarter of last fiscal, against Rs 898.9 crore in the corresponding quarter of the previous year.

Operating profits fell 12 per cent to Rs 1,409.7 crore (Rs 1,694.87 crore), mainly on account of a 33 per cent increase in total expenses. Net interest income rose 5 per cent, as a result of a 29 per cent growth in interest income.

“Our focus during the year was on business consolidation rather than growth, besides de-risking our portfolio. For the first time in several quarters, our NPA ratios have come down during the quarter compared to the previous quarter (sequentially),” Mr S. Raman, Chairman and Managing Director, Canara Bank, said while announcing the results.

NPA provisioning

Total provision for the quarter was at Rs 662 crore, which includes Rs 390 crore towards NPA provisioning, he pointed out. Gross NPA stood at 1.73 per cent (1.49 per cent), while it was at 1.81 per cent in the December quarter. Net NPA was at 1.46 per cent (1.1 per cent), and in the December quarter, it was at 1.41 per cent.

For the fiscal ended March 31, 2012, the bank's net profit was down 18 per cent to Rs 3,282.72 crore (Rs 4,025.89 crore). Net interest income came down marginally to Rs 7,689.34 crore (Rs 7,699.33 crore).

Net interest margin was at 2.5 per cent (3.12 per cent), caused by a 155 basis point increase in cost of deposits and only a 120 basis point rise in yield on advances.

“Some of the RBI rate hikes during the last fiscal were not transmitted, and there was also a significant increase in cost of deposits. With less demand for credit, we were not able to transmit,” said Mr Raman.

The bank's board of directors has recommended 110 per cent dividend, or Rs 11 per equity share of the face value of Rs 10, for the year ended March 31, 2012.

anju@thehindu.co.in