Canara Bank

Asset quality improves

Nov 07, 2019 09:11 IST capital market

Canara Bank has posted 22% growth in the net profit to Rs 365 crore in the quarter ended September 2019 (Q2FY2020), driven surge in non-interest income, moderate growth in operating expenses, decline in provisions and lower tax rate. The bank has also exhibited improvement in asset quality with the decline in fresh slippages of loans in Q2FY2020.

The bank has posted 8% growth in its business volume driven by 10% increase in deposits and 4% rise in loans end September 2019.

Asset quality improves: the bank has exhibited improvement in asset quality with the decline in fresh slippages of loans and higher NPA reductions.

  • The fresh slippages of loans declined to Rs 2602 crore in Q2FY2020 from Rs 3676 crore in Q1FY2020 and Rs 3697 crore in Q2FY2019.
  • The recoveries of NPAs was healthy at Rs 1297 crore and upgradations at Rs 707 crore, while the write-off loans stood at Rs 1286 crore in Q2FY2020.
  • The bank has 262 accounts with the exposure of Rs 35693 crore under NCLT with provisions coverage ratio of 78.4%.
  • The bank has improved provision coverage ratio improved to 70.1% end September 2019 from 68.6% end June 2019
  • The capital adequacy ratio of the bank stood at 13.99% with Tier I ratio at 11.12% end September 2019.
Asset Quality Indicators: Canara Bank
1909 1906 1903 1812 1809 Variation
QoQ YTD YoY
Gross NPA (Rs Crore) 38711.33 39399.02 39224.12 44621.27 45233.22 -2 -1 -14
Net NPA (Rs Crore) 22090.04 23149.62 22955.11 26591.07 26777.64 -5 -4 -18
% of GNPA 8.68 8.77 8.83 10.25 10.56 -9 -15 -188
% of NNPA 5.15 5.35 5.37 6.37 6.54 -20 -22 -139
Provision coverage ratio % 70.1 68.62 68.13 62.54 61.39 148 197 871
% CRAR - Basel III 13.99 11.7 11.9 12.21 12.62 229 209 137
% CRAR - Basel III - Tier I 11.12 8.92 9.03 9.54 9.86 220 209 126
Variation in basis points for figures given in percentages and in % for figures in Rs crore

Business highlights:

The total business of the bank has increased 8% to Rs 1055653 crore end September 2019, driven by 10% increase in deposits to Rs 609436 crore. The loan book of the bank has moved up 4% to Rs 446217 crore. The CD ratio of the bank has declined to 73.2% end September 2019 from 73.6% a quarter ago and 77.6% a year ago.

The loan book of the bank has moved up 4% to Rs 446217 crore end September 2019 with 8% growth in the priority sector loans to Rs 209124 crore, while the non-priority sector loans increased 1% to Rs 237093 crore end September 2019.

The priority and retail loans increased 10% to Rs 264304 crore, while corporate credit decline 4% to Rs 175519 crore end September 2019. The retail loan book of the bank has surged 22% to Rs 82122 crore driven by 20% growth in housing loans, auto loans 32% and other personal loans 27%.

The investment book of the bank has moved up to Rs 159136 crore end September 2019 with HTM book at Rs 101555 crore, AFS at Rs 57433 crore and HFT at Rs 148 crore end September 2019. The modified duration of AFS book stood at 2.31 year and entire portfolio at 4.71 years.

The non-interest income of the bank has increased 33% to Rs 2070 crore, driven by surge in treasury income to Rs 259 crore and profit on foreign exchange to Rs 320 crore. The core fee income of the bank has also improved to Rs 1123 crore, while recoveries in written off accounts declined to Rs 338 crore in Q2FY2020.

The bank has witnessed decline in the net interest margin to 2.21% in Q2FY2020 from 2.29% in Q1FY2020, driven by 16 bps qoq decline in yield on funds to 7.03%, while cost of funds decline only 3 bps qoq to 5.25% in Q2FY2020.

The bank has network of 6305 domestic branches, 5 overseas branches and 8801 ATMs end September 2019. Bank has also engaged 3650 business correspondents agents (BCAs) since November 2018 as additional customer touch points.

The clientele base of the bank has increased to 8.99 crore, of which deposits customer base stands at 8.02 crore and borrowal customers at 0.97 crore end September 2019.

The credit cost of the bank has declined to 2.06% in Q2FY2020 from 2.14% in Q1FY2020 and 2.28% in Q2FY2019. The provisions for NPAs declined 4% to Rs 2295.61 crore in Q2FY2020.

Book value of the bank stood at Rs 403.8 per share, while adjusted book value (net of NNPA) was at Rs 110.6 per share end September 2019.

Financial Performance H1FY2020

The bank has posted 19% increase in the net profit to Rs 693.99 crore in H1FY2020.

Canara Bank: Financial Results

 

1909 (3) 1809 (3) Var % 1909 (6) 1809 (6) Var % 1903 (12) 1803 (12) Var %
Interest Earned 12392.14 11123.75 11 24592.66 22483.30 9 46810.34 41252.09 13
Interest Expended 9262.38 7842.48 18 18222.29 15319.13 19 32332.22 29088.76 11
Net Interest Income 3129.76 3281.27 -5 6370.37 7164.17 -11 14478.12 12163.33 19
Other Income 2069.59 1555.31 33 3931.46 3388.22 16 6574.96 6942.85 -5
Net Total Income 5199.35 4836.58 8 10301.83 10552.39 -2 21053.08 19106.18 10
Operating Expenses 2654.74 2509.20 6 5317.21 5292.22 0 10462.21 9557.94 9
Operating Profits 2544.61 2327.38 9 4984.62 5260.17 -5 10590.87 9548.24 11
Provisions & Contingencies 2037.97 2835.14 -28 3937.10 5417.44 -27 12918.28 16109.10 -20
Profit Before Tax 506.64 -507.76 LP 1047.52 -157.27 -766 -2327.41 -6560.86 -65
Provision for Tax 141.72 -807.30 PL 353.53 -738.30 -148 -2674.43 -2338.62 14
PAT 364.92 299.54 22 693.99 581.03 19 347.02 -4222.24 LP
EPS*(Rs) 19.38 15.91 18.4 15.4 4.61 -56.05
* Annualized on current equity of Rs 753.24 crore. Face Value: Rs 10, Figures in Rs crore
PL: Profit to Loss, LP: Loss to Profit
Source: Capitaline Corporate Database

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