Canara Bank Reports 28% Increase in Q4 Net Profit, Reaching Rs 5,070 Crore

Canara Bank has announced a significant increase in its net profit for the March quarter, reporting Rs 5,070 crore, a 28% rise from Rs 3,951 crore during the same period last year. The bank’s board has also proposed a generous dividend of 200%, equating to Rs 4 per share. This growth is attributed to an increase in other income and recoveries, according to the bank’s Managing Director and CEO, Satyanarayana Raju. Additionally, the bank’s global business has surpassed the Rs 25 lakh crore mark, reaching Rs 25.3 lakh crore by the end of the quarter.

Profit Growth and Dividend Proposal

Canara Bank’s impressive profit growth reflects a robust financial performance in the recent quarter. The reported net profit of Rs 5,070 crore marks a substantial increase compared to the previous year’s figure of Rs 3,951 crore. This growth is largely driven by a rise in other income and recoveries from written-off accounts. The bank’s board has proposed a dividend of 200%, translating to Rs 4 per share, which is expected to please shareholders. The bank’s shares saw a 1.8% increase, even as the broader BSE Sensex experienced a slight dip of 0.5%. This positive market reaction underscores investor confidence in the bank’s financial health and future prospects.

Business Expansion and Financial Metrics

Canara Bank’s global business has reached a significant milestone, crossing the Rs 25 lakh crore threshold. By the end of the quarter, the bank’s total global business stood at Rs 25.3 lakh crore. The bank reported an 11% growth in global deposits, amounting to Rs 14.6 lakh crore, and an 11.74% increase in advances, totaling Rs 10.7 lakh crore. Despite the growth in loans, the bank’s net interest income saw a slight decline of 1.4%, dropping to Rs 9,442 crore from Rs 9,580 crore a year earlier. This decrease is attributed to pressure on margins following interest rate cuts, leading to a reduction in the net interest margin from 3.05% to 2.8%.

Non-Interest Income and Asset Quality

The bank’s non-interest income has also shown a remarkable increase, rising by 21.7% to reach Rs 6,351 crore in the quarter. This growth was bolstered by a 30% surge in recoveries from written-off accounts, which amounted to Rs 2,471 crore. Additionally, treasury income rose by 15% to Rs 995 crore. The bank reported a decrease in fresh slippages to Rs 2,655 crore, while the gross non-performing asset (NPA) ratio improved to 2.94%, down from 3.34% in the previous quarter. Total provisions for the quarter fell to Rs 1,831 crore from Rs 2,483 crore a year earlier, although provisions for NPAs increased to Rs 2,849 crore from Rs 2,282 crore.

Future Outlook and Loan Growth

Looking ahead, Canara Bank anticipates loan growth of 10-11% for the current financial year. The bank expects demand to rise from the infrastructure sector and core industries that support infrastructure development, as well as from businesses such as data centers. Despite potential economic slowdowns, Raju expressed confidence that achieving this growth target would not be challenging. The bank’s strategy includes a focus on secured loans, with 44% of its loan book linked to external benchmarks, allowing for immediate repricing in response to repo rate changes. Raju also noted that the bank aims to further reduce gross NPAs to 2.5% in the upcoming fiscal year, reflecting a proactive approach to managing asset quality.

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