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Friday, May 3, 2013

Shedding bulk business pushes Canara Bank Q4 net down 12.5%

Canara Bank profits declined by 12.5 per cent to Rs 725.38 crore for the fourth quarter (Q4) 2012-13, compared with the previous year's fourth quarter.

However, the bank’s total income for Q4 is up 4.81 per cent to Rs 9,471.57 crore (Rs 9,036.75). While the EPS (basic) was Rs 16.37 in Q4 financial year 2012-13, it was Rs 18.72 for the previous year’s period.

R.K. Dubey, the bank’s CMD, said: “The lower business growth of the bank was due to a conscious decision taken to de-risk the balance sheet by shedding a substantial portion of bulk business, both on preferential rate deposits and certificates of deposit (CDs) (Rs 74,500 crore) as well as short-term unsecured loans (Rs 22,000 crore), totalling Rs 96,500 crore.” The bank’s operating profit before provisions and contingencies increased by 13.88 per cent to Rs 1,697.73 crore, compared with Rs 1,490.70 crore the previous year.

Asset quality

In terms of asset quality, gross NPAs were Rs 6,260.16 crore (Rs 4,031.75 crore in the same period the previous fiscal), and the percentage of gross NPAs is 2.57 per cent (1.73 per cent).

Net NPAs stood at Rs 5,278.07 crore (Rs 3,386.31 crore), while the percentage of net NPAs is 2.18 per cent (1.46 per cent).

Net interest income (NII) for the quarter was Rs 2,091 crore, better than the 2.5 per cent over Q4-FY12 (Rs 2,040 crore).

Net interest margin (NIM) of the bank as at March 2013 is 2.40 per cent (2.5 per cent end March 2012). Provisions and contingencies other than tax increased to Rs 752.35 crore from Rs 461.61 crore in the corresponding quarter of the previous year. The bank’s total deposits at the end of FY 2012-13 stood at Rs 3,55,856 crore compared to Rs 3,27,053.73 crore the previous year. Advances of the bank reached a level of Rs 2,42,177 crore (Rs 232489.82).

Enough headroom

The bank’s current and savings account (CASA) deposits to domestic deposits stood at 25.1 per cent, the same level as in the previous fiscal.

As at March 2013, the capital adequacy ratio (CAR) was 12.4 per cent (against the mandatory 9 per cent), with Tier I capital ratio at 9.77 per cent (mandatory level - 6 per cent).

Canara Bank has made adequate headroom available under both Tier-I and Tier-II options to raise capital and support business growth momentum.

Source: thehindubusinessline


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