Canara Bank Ltdsaid on Wednesday its third-quarter Net Profit Plunged 61 percent, missing analysts' estimates, pulled down by higher provisions for bad loans.
Net Profit came in at 1.26 billion rupees ($19.78 million) for the quarter ended Dec. 31, compared with 3.22 billion rupees a year ago, the country's fifth-biggest state-run lender by assets said.
Gross bad loans as a percentage of total loans stood at 10.38 percent at end-December, compared with 10.51 percent in the previous quarter, and 9.97 percent a year ago.
Provisions for bad loans rose about 28 percent to 19 billion rupees. Canara Bank net profit plunged in its third quarter due to higher provisions for Non Performing Assets (NPAs).
“The net profit has declined to 61%, mainly because of ageing provision on the treasury. Hence we had to make Rs74 crore provision on treasury bonds which affected decline in profits,” Canara Bank Limited managing director and CEO Rakesh Sharma said at the press meet in Bengaluru.
“However, it is only a provision. Let us see how the yields move in the next quarter. Accordingly, we will take a view to make adjustments,” he said.
Sharma said the gross NPA ratio stood at 10.38%, down sequentially from 10.51% as on September 2017, while net NPA stood at 6.78%, down sequentially from 7.02% as at September 2017.
The net interest margin improved to 2.64% domestically and 2.39% globally, he added. The cost of deposits came down by a healthy 72 bps to 5.59% from 6.31%, Sharma said.
He also said net interest income growth of 52.4% and 11.29% growth in non-interest income, excluding trading profits significantly shielded them from ã unexpected quarter-end surge in bond yields and resultant market-to-market provisions.The banks strenuous efforts for recovery has resulted in improved recovery under stressed assets, especially written off assets, thereby improving the bank’s non-interest income, he said.