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Our Bureau

Bangalore , May 7

THE net profits of Canara Bank have dropped by 74 per cent in the fourth quarter of fiscal 2004-05, led by sharp increase in provisions and depreciation in the value of investments.

Profits during Q4 of the last financial year were Rs 102.30 crore, against Rs 384.12 crore in the fourth quarter of 2003-04. The public sector bank's net provisions in Q4 last year were Rs 654 crore, against Rs 294 crore the previous fiscal.

The bank reported a net profit of Rs 1,110 crore for the financial year ended March 2005, down 17 per cent from the previous fiscal's Rs 1,338 crore.

Despite the drop, the bank's board has, however, recommended a final dividend of 30 per cent for the year. This works out to a total dividend of 55 per cent, inclusive of the interim dividend of 25 per cent during the year. The total dividend payout for the year would be Rs 225.50 crore, against Rs 205 crore the previous year.

Briefing reporters on the results, Mr B. Swaminathan, Executive Director, said the drop in net profits was due to large provisions and depreciation in investments.

The bank incurred Rs 1,476 crore as provisions last year, against Rs 1,521 crore during the previous corresponding period. The provisions include Rs 807 crore for non-performing assets and Rs 664 crore for floating provisions. Provision for depreciation in the value of investment was Rs 485 crore during the year.

Large provisions, however, brought down the bank's net NPA ratio to 1.88 per cent and at the same time improved the NPA coverage ratio to 80 per cent.

During the year, the bank's operating profits also shrank 9.6 per cent to Rs 2,585.33 crore last year, against the previous year's Rs 2,858.72 crore. This was pulled down by a steep fall of 57 per cent in treasury incomes.

Profits on sale of investments were only Rs 499.78 crore in 2004-05, against Rs 1,150 crore the previous corresponding period. Profits would have fallen sharper but for the bank's recovery efforts. Last year, it was able to make a cash recovery of about Rs 869 crore, against Rs 606 crore the previous year.

Besides, the bank was able to improve its interest earnings on advances. Interest on advances rose 11.92 per cent to Rs 4,272.64 crore last year from the previous year's Rs 3,817.72 crore. This was partly driven by the 25-per cent increase in credit in 2004-05.

Canara Bank managed to contain the growth of its gross expenditure during the period. Gross expenditure growth was 4.97 per cent at Rs 6,530 crore from the previous year's Rs 6,221.11 crore. Interest expenditure growth was restricted to just 2.25 per cent during the last financial at Rs 4,421.50 crore, against Rs 4,324.56 crore the previous year. Similarly, operating expenditure growth was contained to 11.20 per cent at Rs 2,109 crore, against the previous year's Rs 1,896.55 crore.

Canara Bank targets a business turnover of Rs 1.82 lakh crore (Rs 1,82,000 crore) this year - a 15.08-per cent growth, Mr Swaminathan said. Deposits are estimated at Rs 1.1 lakh crore and advances at Rs 72,000 crore.

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