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Our Bureau

Bangalore , Oct. 28

CANARA Bank has reported a 22 per cent increase in net profits in the second quarter of this fiscal despite fall in treasury incomes.

Speaking to reporters here today, Mr R.V. Shastri, Chairman and Managing Director of Canara Bank, said that net profitfor the second quarter was Rs 396.79 crore, up from Rs 325.35 crore in the same period last year. The bank improved its net profit despite sharp drop in operating profits during the period. Operating profit in the second quarter was Rs 574.84 crore (Rs 998.43 crore). However, since the provisions were low, the bank's net profit improved. Gross provisions were Rs 178 crore (Rs 673.08 crore).

But the fall in operating profit during the period was also due to the drop in gross income. Gross income fell to Rs 2,206.12 crore in Q2, down from Rs 2,521 .85 crore. Interest income was Rs 1,839.65 crore (Rs 1,745.27 crore).

On the other hand, income from treasury operations dropped to Rs 96.08 crore (Rs 541 crore). The bank, despite the fall in treasury profits, has chosen not to exercise the option of reshuffling its investment portfolio between the `held to maturity' and the `available for sale' categories as permitted by the RBI. Income from advances rose to Rs 1,014.14 crore (Rs 919.45 crore). The bank's gross profits were also knocked by the rise in total expenditure. Gross expenditure rose to Rs 1,110.49 crore (Rs 1,043 crore). The rise was led by increased interest expenditure, which rose to Rs 1,065.42 crore (Rs 997.04 crore).

Fully provides for BPL exposure

CANARA Bank has fully provided for its exposure in the BPL group and treated it as a sub-standard asset.

Bank sources said that they had provided Rs 100 crore this quarter.

The gross provisions made for non-performing assets during the second half of this year was Rs 240 crore which included the BPL group. Last quarter, Canara Bank provided Rs 50 crore.

BPL, after Dabhol Power Company is among the large debtors to the bank. Canara Bank's exposure in BPL was Rs 150 crore. In the case of the Enron promoted DPC, the provisions were Rs 429 crore. The bank had fully provided for this exposure also and treated the assets as sub-standard.

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