The Hindu Business Line : Higher interest income lifts Canara Bank profit by 53%

Money & Banking - Financial Performance
Corporate Results - Public Sector Banks
Web Extras - Performance
Higher interest income lifts Canara Bank profit by 53%

Mr A.C. Mahajan

Our Bureau

Bangalore, Jan. 23 Public sector Canara Bank has classified the Ratnagiri Gas and Power Ltd as a non-performing asset.

Speaking to reporters here on Friday, the Canara Bank Chairman and Managing Director, Mr A.C. Mahajan, said, “We have decided to treat loans to the project as a substandard asset.”

Canara Bank has an exposure of Rs 400 crore to the project. Assets classified as substandard would have to be provisioned at 10 per cent.

Mr Mahajan, however added, “We expect the project to turnaround in three months.” Canara Bank made provisions for Rs 352.57 crore for the third quarter (Q3) of the current financial year (2008-09). For the corresponding period of the last financial year, the provisions amounted to Rs 199 crore.

The high provisions notwithstanding, Canara Bank’s net profits rose to Rs 702 crore in Q3 or a 53 per cent increase over the corresponding Q3 of the last financial year. Mr Mahajan said that the increase in the net profit was largely driven by the increase in interest income during the period.

Gross income in Q3 rose to Rs 5,382.90 crore, up from Rs 4,096.60 crore during the corresponding quarter of the previous year. Interest income during the period rose to Rs 4,625 crore, from Rs 3,550.16 crore during the period. The net interest income rose to Rs 1,244 crore during the period, up from Rs 934 crore. The net interest margin, as a result, rose to 2.75 per cent from 2.42 per cent during the period. The bank hopes to defend its NIM for the rest of the year.

What also contributed to the bank’s net was the large increase in trading income — profits from treasury operations. The increase in treasury profits reflected in the high other income during the period was at Rs 757 crore from Rs 546.44 crore during the corresponding period of the last financial year. In addition, the bank’s profit was also buoyed by high cash recoveries. For the first nine months of the current financial year, the bank made cash recoveries of Rs 884 crore, which contributed to the improved bottom line.

Responding to questions Mr Mahajan said, "We do not have any exposure in Satyam or Maytas group. However, we some small exposures in their infrastructure joint venture projects."

Canara Bank, he said, had obtained licences to open branches in Johannesburg, Frankfurt, Muscat, Manama, QFC-Qatar, Leicester, New York, Sao Paulo (Brazil), Dar-er-salam (Tanzania) and Tokyo. These were among the 21 centres identified for expanding the bank's global footprint.

More Stories on : Financial Performance | Public Sector Banks | Performance

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
IOC sees window to convert forex loans into rupee

Rupee a tad lower

Forex reserves fall by $2.58 b

Service tax on deposit insurance premium looms over banks

IDBI Bank Q3 net rises 27%

Union Bank net rises 84% on growth in interest income

Higher interest income lifts Canara Bank profit by 53%

Syndicate Bank net grows 30%

Vijaya Bank Q3 net up 24%

ING Vysya Bank net up 22%

Shriram Transport net grows 35%

IDBI Fortis to sponsor cricket series

Insurance cover for fishermen to be hiked

‘Derisking’ the market economy

‘Job prospects in IT, financial services bleak’

Call rate ends marginally lower