Impact of large provisions on account of depreciation of investments
The bank'sadvances are estimated to grow to Rs 95,000 crore
Targetsbusiness of Rs 233,000 crore for the financial year
Plans toraise at least Rs 4,000 crore of capital
Bangalore, July 20
Canara Bank's first quarter net profit increased by 2.2 per cent to Rs 190.93 crore as against Rs 186.90 crore posted during the corresponding period of the previous year.
Addressing a press conference here on Thursday, the Canara Bank's Chairman and Managing Director, Mr M.B.N. Rao, said that the profits would have shown a much higher increase but for the large provisions the bank had incurred on account of depreciation of investments. Depreciation provision was Rs 276.91 crore in Q1 this year as against Rs 188.41 crore during the previous year.
Operating profits rose 5.3 per cent for the same period to Rs 590.20 crore from Rs 560.30 crore. Canara Bank's gross income rose to Rs 2,770.95 crore from Rs 2,238.58 crore.
The increase in income was driven by interest income that rose to Rs 2,512 crore from Rs 1,979.53 crore. Interest on advances rose 35 per cent to Rs 1,651.85 crore.
The increase in interest income was powered by a 36 per cent in advances to Rs 80,319 crore.
Gross expenditure also rose to Rs 2,180.75 crore, up from Rs 1,678.28. The increase was largely on account of an increase in interest costs on deposits.
Interest expenditure was up at Rs 1,565 crore from Rs 1,146.69 crore. This increase pushed down the net interest margin of the bank slightly down to 3.22 per cent from 3.36 per cent during the corresponding period of the previous financial year.
Mr Rao, however, said that net interest margin would be restored as some of the loans get re-priced. The bank during the period brought down its gross non performing assets to 2.15 per cent of the advances in Q1 or Rs 1,738 crore as against 3.86 per cent or Rs 2,339 crore for the corresponding period of the previous year.
Canara Bank has targeted a business of Rs 233,000 crore for the financial year. In its guidance for the current year, the advances are estimated to grow to Rs 95,000 crore.
For sustaining the advances, Mr Rao said that the bank would be raising more capital. The bank currently has a capital adequacy ratio of 11.02 per cent. For the current year, the bank hoped to raise at least Rs 4,000 crore of capital. Mr Rao said that the bank was weighing the capital raising options, though it had the option of raising the full amount in the form of debt itself.