Canara Bank net up 32 percent on strong interest income (Lead, Changing Dateline)

October 20th, 2008 - 7:22 pm ICT by IANS  

Bangalore, Oct 20 (IANS) State-run Canara Bank posted net profit of Rs.5.3 billion for the second quarter this fiscal, registering a robust 32 percent growth from Rs.4.02 billion in the corresponding period last year on strong interest income.”Our total income, including interest on advances and bills, has gone up 9.7 percent to Rs.44.48 billion in the quarter from Rs.40.55 billon in the corresponding period a year ago on strong credit growth. Recovery of Rs.5.83 billion during the quarter has also improved our bottomline substantially,” Canara Bank chairman and managing director A.C. Mahajan told reporters here Monday.

Operating profit grew 19 percent to Rs.7.74 billion from Rs.6.5 billion a year ago.

Similarly, the bank’s net interest income has shot up to Rs.11.49 billion from Rs.7.87 billion a year ago, registering a whopping 46 percent growth.

“Reflecting renewed thrust on profitability, the net interest margins have improved sequentially to 2.7 percent in the second quarter as against 2.54 percent in the first quarter this fiscal at 2.54 percent and 2.36 in March (fourth quarter of last fiscal),” Mahajan said.

The bank’s other income from sale of investments for the quarter declined to Rs.3.39 billion from Rs.57.21 billon in the corresponding period a year ago due to lower profit in treasury operations and current market conditions. Similarly, interest on balances with the Reserve Bank of India (RBI) and inter-bank funds declined to Rs.527 million from Rs.1.04 billion a year ago.

The bank has revised its aggregate business target to Rs.3.15 trillion for 2008-09 from Rs.3 trillion earlier, comprising aggregate deposits of Rs.1.85 trillion and advances of Rs.1.30 trillion.

Though the capital adequacy ratio (CAR) for the quarter declined marginally to 13.21 from 13.89 percent during the corresponding period a year ago, Mahajan hinted that the bank had enough headroom to raise Rs.10 billon under tier-1 or tier-2 when the market conditions improve.

“As the government’s holding in the bank is at 73.17 percent, we have enough headroom for need-based capital augmentation under tier-1,” he said.

The listed bank’s earnings per share (EPS) has gone up to Rs.12.91 for the quarter from Rs.9.79 in the corresponding period a year ago, while percentage of net non-performing assets declined marginally to 0.89 percent from 0.99 percent a year ago.

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