The Hindu Business Line : Canara Bank rejigs credit portfolio; Q2 net up 11%

Strategic shift: Mr M.B.N. Rao (right), CMD, Canara Bank, and Mr D. L. Rawal, Executive Director, at a press conference in Bangalore on Wednesday. –

Our Bureau

Bangalore, Oct. 31 Public sector Canara Bank rebalanced its credit portfolio and shifted focus to priority sector areas during the second quarter of the current financial year.

Briefing reporters at a press conference here today, Canara Bank Chairman and Managing Director, Mr M.B.N. Rao said, “We have contained the growth of retail advances.” Retail advances grew only 5.91 per cent on year-on-year basis to Rs 17,187 crore. Priority sector advances grew 25.08 per cent during the same period to Rs 38,920 crore.

The portfolio moderation notwithstanding, the yield on advances improved to 10.23 per cent from 8.95 per cent. The improved yield was partly achieved through repricing of advances, Mr Rao said.

At least 10 per cent of the outstanding advances of Rs 95,344 crore had been repriced, he said. Canara Bank’s net as a result improved 11 per cent in Q2 over the corresponding period of the last financial year to Rs 401.57 crore.

The results pushed up the share prices which closed at Rs 292.95 today, up from Rs 285.70 on Tuesday.

The profits were partly buoyed by the Rs 423 crore received through recovery of non- performing loans. Besides, the bank also received Rs 90 crore on account of its divestment in its asset management company to Dutch financial conglomerate, Robeco Asset Management Company. However, Mr Rao said, the bank’s premium receipts of Rs 125 crore from HSBC Holdings for the life insurance business, would be reinvested.

Canara Bank, he said, had stepped up its overseas expansion drive. This year at least five branches would be opened in international locations, he added. These included Johannesburg, Frankfurt, Muscat Manama and QFC-Qatar.

The bank he said, despite the industry wide credit slowdown, would still end up with an advances portfolio of Rs 1.2 lakh crore for the current financial year.

However, the bank was capping its intake of bulk deposits.

The bank, he said, had taken a conscious decision to cap bulk deposit rates at 9 per cent.

Outstanding bulk deposits currently were about Rs 50,000 crore, he added. These, however, would be shed during the course of the year, he said.