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— G.R.N. Somashekar

Mr A.C. Mahajan, Chairman and Managing Director, Canara Bank, at a press conference in Bangalore on Monday.

Our Bureau

Bangalore, July 21 Public sector Canara Bank reported a 49 per cent drop in net profit for the first quarter, largely hurt by higher provisions compared with the year-ago period, but forecast 20 per cent growth for the year.

For the quarter, net profit was Rs 122.68 crore, compared with Rs 240.55 crore in the corresponding quarter last year. Total provision (other than tax) for the period increased to Rs 540.91 crore (Rs 301.52 crore). Provision for tax was Rs 40 crore.

Provision for investment was Rs 401 crore, while provision for non-performing assets was Rs 140 crore, said Mr A.C. Mahajan, who took over as the Chairman and Managing Director recently. “Due to rising inflation and sharp increase in bond yield, the bank took a hit on its investment portfolio, but for which net profit growth would have been up by 54 per cent,” he said. Net interest income for the first quarter increased to Rs 1,019 crore, up from Rs 894 crore a year ago. Net interest margin grew 15 percentage point sequentially.

Operating profit recorded a 15 per cent growth to reach Rs 704 crore, compared with Rs 612 crore for the corresponding quarter a year ago.

Mr Mahajan said the gross NPA ratio came down to 1.31 per cent in the last quarter from 1.55 per cent in the year-ago quarter. Net NPA ratio declined to 0.85 per cent from 0.89 per cent.

The bank said it has obtained the final clearance from the Chinese banking authority for converting its representative office at Shanghai into a full-fledged branch. It has also obtained approval from the Reserve Bank of India to open five branches in Johannesburg, Frankfurt, Muscat, Manama and QFC-Qatar.

Giving the outlook for FY09, Mr Mahajan said the bank expects global business to surpass Rs 3,00,000 crore. Global business was Rs 2,66,242 crore at the end of June 2008, compared with Rs 2,37,866 crore at the end of June 2007.

Shares of the bank gained Rs 1.15 to close at Rs 165.65 on Monday at the Bombay Stock Exchange.

More Stories on : Financial Performance | Public Sector Banks

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