Public sector lender Canara Bank's bottomline performance for July-September quarter is largely dependent on provisions that had increased 73 percent year-on-year in June quarter. Profit is expected to fall 0.3 percent year-on-year to Rs 625 crore during the quarter, which was down 41 percent in preceding quarter. Earnings will be announced on November 4.
Net interest income, the difference between interest earned and interest expended, may increase 9.9 percent to Rs 2,602 crore in quarter ended September 2015 compared to Rs 2,367.8 crore in same quarter last fiscal with likely loan growth of 6-7 percent.
Asset quality is a key factor to watch out for in earnings. In June quarter, share of stressed sectors for Canara Bank was high. Infra (roads, ports, airports, power) was 19.9 percent of total advances. Within infra, power (generation transmission & distribution) was 14 percent of total advances. State electricity boards’ exposure is 8.3 percent of total advances.
According to analysts, domestic net interest margin if maintained at Q1 level of 2.35 percent would be positive.
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