Canara Bank Q1FY23 net profit jumps 71.79 pc y-o-y to Rs 1177 cr

The bank said its operating profit grew 20.53 percent y-o-y to Rs 6606 crore in the quarter ended June 30.

Canara Bank MD & CEO LV Prabhakar said that the bank's y-o-y credit growth reflected the lower base effect but this factor has not come into play when compared to the previous quarter's performance. "The real growth in credit is represented by q-o-q performance," he explained.

The bank's global gross advances and domestic gross advances grew q-o-q by 5.74 percent and 5.22 percent, respectively.

Domestic Advances (gross) of the Bank stood at Rs 748140 Cr as at June 2022 grew by 13.14 percent (y-o-y)

Compared to the Q1FY22, its Q2FY23 gross advances surged 14.47 percent. Agriculture and allied credit improved by 18.42 percent to Rs 185680 crore, retail credit increased by 11.56 percent to Rs 128615 crore with housing loans recording a growth of 16.03 percent to Rs 75578 crore during the period under review.

Global Business increased by 11.45 percent (y-o-y) to Rs 1901776 Cr as at June 2022 with Global Deposits at Rs 1118122 Cr 9.42 percent (y-o-y) and Global Advance (gross) at Rs 783654  Cr 14.47 percent (y-o-y)

Domestic Deposit of the Bank stood at Rs 1052907 Cr as at June 2022 with growth of 8.49 percent (y-o-y)

The bank added that its RAM (reverse annuity mortgage) credit, which constitutes 56 percent of its total advances, grew by 14.85 percent.

As of June 2022, the bank's CRAR stood at 14.91 percent, out of which Tier I is 12.13 percent and Tier II is 2.78 percent.

CET1 is 10.49 percent (10.26 percent as at March 2022) and Tier-II is 2.78 percent (2.99 percent as at March 2022).

Common Equity Tier 1 (CET1) is a component of Tier 1 capital that is mostly common stock held by a bank or other financial institution.

Prabhakar said that the bank wants to maintain a healthy CRAR and wants to achieve a CRAR of more than 15 percent.

He said the bank has the approval to raise Rs 5500 crore via AT-1 Bonds and Rs 3,500 crore through Tier II Bonds.

However, the entire money would not be raised in one quarter and spread across tranches depending on the market condition.

Return on Assets improved to 0.65 percent for Q1FY23 against 0.41 percent for Q1FY22.

Return on Equity improved to 16.33 percent for Q1FY23 against 11.53 percent for Q1FY22.

Gross Non-Performing Assets (GNPA) ratio stood at 6.98 percent as at June 2022 as against 7.51 percent at March 2022, 8.50 percent as at June 2021.

Net Non-Performing Assets (NNPA) ratio stood at 2.48 percent as at June 2022 as against 2.65 percent as at March 2022,3.46 percent as at June 2021.

Provision Coverage Ratio (PCR) improved to 84.51 percent as at June 2022 from 81.18 percent as at June 2021. Prabhakar said that the bank wants to maintain a provision of 85 percent.

Canara Bank MD said that the drop in the bank's Net Interest Margin (NIM) in the June quarter has not increased despite the increase in repo rate by the Reserve Bank and it would be reflected in the NIM and Net Interest Income (NII) of the second quarter.

The Bank has achieved Targets in Priority Sector at 51.32 percent and Agricultural Credit at 24.22 percent of ANBC as at June 2022, as against the norm of 40 percent and 18 percent respectively

  Credit to small and marginal farmers stood at 18.20 percent of ANBC, against the norm of 9.50 percent

  Credit to Weaker Sections stood at 24.25 percent of ANBC, against the norm of 11.50

As on 30.06.2022, the Bank has 9732 Domestic Branches, out of which 3041 are Rural, 2751 Semi- Urban, 1997 Urban & 1943 Metro along with 10802 ATMs.  Bank is also having 3 overseas branches in London, Dubai and New York.

For FY23, the bank slippages to remain within the upper limit of Rs 15,000 crore for slippages, however, it expects larger recoveries.

The slippages are likely to arise from small ticket loans, which the bank plans to reduce with early detection.