Moneycontrol Bureau
Public sector lender Canara Bank's profit in October-December quarter increased 279 percent to Rs 322 crore compared with Rs 85 crore in year-ago period, but asset quality worsened further on sequential basis. Profit was lower-than-expected due to higher tax & provisions and slow NII growth despite sharp increase in other income and operating profit.
Net interest income, the difference between interest earned and interest expended, grew by 8.4 percent year-on-year to Rs 2,414 in the quarter ended December 2016.
Earnings missed analysts' expectations. Profit was estimated at Rs 356.7 crore and net interest income at Rs 2,516 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18.
Other income shot up 53.3 percent year-on-year to Rs 1,791.7 crore and operating profit was up 27.6 percent at Rs 1,981.33 crore in October-December quarter.
Asset quality weakened further during the quarter. Gross non-performing assets (NPA) as a percentage of gross advances increased to 9.97 percent (from 9.81 percent QoQ) and net NPA rose 9.72 percent (from 6.69 percent) in Q3.
While addressing press conference, Canara Bank chief Rakesh Sharma says the bank expects to bring NPA down to 5-6 percent by March 2018 and two big accounts are expected to be resolved by March 2017.
He feels slippages in Q4 will not be more than Rs 1,000 crore against Rs 2,225 crore in Q3 and he sees FY17 loan growth at 7-8 percent.
In absolute terms, gross NPAs were up 3 percent quarter-on-quarter at Rs 34,339 crore and net NPAs up 1.9 percent at Rs 22,296 crore in Q3.
Provisions for bad loans increased 4 percent year-on-year to Rs 1,486 crore but sequentially declined 6.3 percent in December quarter. Provision coverage ratio improved QoQ to 52.52 percent in Q3 from 51.8 percent Q2.
Tax expenses during the quarter jumped 353.4 percent to Rs 175 crore compared with year-ago period.
At 14:35 hours IST, the stock was quoting at Rs 276.70, down Rs 10.25, or 3.57 percent on the BSE.
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