Canara Bank Q2 net falls 22% to Rs 661 cr, misses forecast
Pubilc sector lender Canara Bank's net profit fell higher-than-expected 22 percent year-on-year to Rs 661 crore in the second quarter of current financial year.
November 06, 2012 / 15:56 IST
Moneycontrol Bureau
Bangalore-based state owned lender Canara Bank's second quarter (July-September) net profit dropped more than 22% year-on-year to Rs 661 crore in 2012-13 on the back of higher operating expenses and lower other income. The quarterly numbers fell short of meeting market expectations. Net interest income (NII) or the difference between interest earned and paid out, declined marginally to Rs 1,957 crore compared with Rs 1,962 crore a year back. Analysts on an average had expected net profit of Rs 853 crore and net interest income of Rs 1,967 crore for the quarter.During the quarter, the bank's loan book remained almost static at Rs 2.15 lakh crore year-on-year basis. Moreover, the book contracted since March 31, 2012 when total loans were at Rs 2.32 lakh crore. Gross non-performing asset (NPA) ratio increased to 2.58% compared with 1.98% in April-June quarter and 1.75% in the corresponding quarter in 2011-12. Net NPA ratio too worsened to 2.12% as against 1.66% in Q1 and 1.42% in Q2, FY12. Poor credit quality may have led the bank to go slow in expanding its credit book. At the same time, the pace of rise in net NPA ratio suggests that the bank have not made full provisions for its bad loans. Net NPAs are determined after deducting provisions from gross NPAs. Indeed, provisions and contingencies were down in the second quarter to Rs 421 crore from Rs 548 crore a year back. "Higher operating expenditures coupled with lower other income actually reduced the headroom for making full provisions. Hence, there is a year-on-year reduction in provisions. The bank could have provided full in absance of those two components," Vaibhav Agrawal, vice president – research, Angel Broking told moneycontrol.com.The growth in deposit book was muted. It rose just 3% y-o-y to Rs 3.37 lakh crore. It was much below the industry projection of 15% in FY13. Capital adequacy ratio stood at 13.07% in the July-September quarter as against 13.22% in the April-June quarter.At 13:45 hours IST, Canara Bank shares were trading at Rs 416 on the NSE, down nearly 1%. saikat.das@network18online.com Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
