The net profit for the year-ago period was at Rs 2,525 crore. Net interest margin (NIM), a key gauge for profitability, was at 3.02% at the end of September, a 19-basis-point improvement year-on-year.
One basis point is a hundredth of a percentage point.
The bank’s NIM may come under pressure in the next two quarters as interest expenses are rising amid tight market liquidity.
“Our guidance for NIM is 3.05%. If liquidity improves, we may be able to maintain NIM above 3%. Otherwise, it may be less than 3%. But it will not go below 2.90%,” managing director Satyanarayana Raju said.
The bank’s operating profit rose 10.3% at Rs 7,616 crore, backed by a near-20% jump in net interest income at 8,903 crore. Other income was little lower at Rs 4,635 crore, against Rs 4,825 crore, primarily due to lower treasury income.
A 28.3% decrease in total provisions at Rs 2,608 crore boosted the state-owned lender’s net profit. Of this, provision to cover bad loans was also lower at Rs 2201 crore against Rs 2745 crore, in sync with asset quality improvement.Gross non-performing assets ratio improved to 4.76%, down by 161 bps year-on-year. Net NPA ratio stood 78 bps lower at 1.41%. Provision coverage ratio also improved 337 bps to 88.73% at the end of September.
The bank’s gross advances grew 12% year-on-year to Rs 9.24 lakh crore, supported by 13.6% rise in retail agriculture and MSME advances which together constitute 56% of total advance portfolio.
Investors flocked to the Canara Bank counter following the quarterly earnings announced during the market hours. Share rose 1.78% to Rs 359.85 on BSE on a day when Sensex tanked 901 points, falling for the sixth straight session.
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