Canara Bank Q1 profit tanks 52% to Rs 229 cr, asset quality weak

Advances during the quarter declined 0.9 percent year-on-year to Rs 3.21 lakh crore while deposits slipped 1.4 percent to Rs 4.65 lakh crore.Profit was far better-than-expectations of Rs 124 crore while net interest income was slightly below estimates of Rs 2,400.4 crore, according to average of estimates of analysts polled by CNBC-TV18.

Other income (non-interest income) jumped 42.4 percent to Rs 1,584.65 crore while operating profit fell 9.2 percent to Rs 1,819 crore compared with year-ago period.

Provisions for bad loans plunged sharply by 76.4 percent sequentially to Rs 1,492.92 crore but increased 9.8 percent on yearly basis.

"The required provision for UDAY scheme as at June 2016 works out Rs 417.71 crore in respect of segment not envisaged to be converted into SDL in FY17 and Rs 68.97 crore for diminution in fair value of loan/discom bonds," the bank said in its filing.

Provision coverage ratio stood at 50.82 percent at the end of June quarter, improved marginally from 50.11 percent in preceding period.

Asset quality weakened further as gross non-performing assets (NPA) increased 31 basis points sequentially to 9.71 percent and net NPA 27 basis points to 6.69 percent in Q1.

On absolute basis, gross NPAs were up 2.2 percent at Rs 32,334 crore and net NPAs increased 3.2 percent to Rs 21,494 crore during the quarter. The scrip of Canara Bank closed at Rs 253.70, up 5.31 percent ahead of quarterly earnings that announced after market hours.