Bangalore-based state owned lender Canara Bank 's second quarter (July-September) net profit
dropped more than 22% year-on-year to Rs 661 crore in 2012-13 on the back of
higher operating expenses and lower other income. The quarterly numbers fell
short of meeting market expectations.
Net interest income (NII) or the difference between interest
earned and paid out, declined marginally to Rs 1,957 crore compared with Rs
1,962 crore a year back.
Analysts on an average had expected net profit of Rs 853
crore and net interest income of Rs 1,967 crore for the quarter.
During the quarter, the bank's loan book remained almost
static at Rs 2.15 lakh crore year-on-year basis. Moreover, the book contracted
since March 31, 2012 when total loans were at Rs 2.32 lakh crore.
Gross non-performing asset (NPA) ratio increased to 2.58%
compared with 1.98% in April-June quarter and 1.75% in the corresponding
quarter in 2011-12. Net NPA ratio too worsened to 2.12% as against 1.66% in Q1
and 1.42% in Q2, FY12.
Poor credit quality may have led the bank to go slow in
expanding its credit book. At the same time, the pace of rise in net NPA ratio
suggests that the bank have not made full provisions for its bad loans. Net
NPAs are determined after deducting provisions from gross NPAs.
Indeed, provisions and contingencies were down in the second
quarter to Rs 421 crore from Rs 548 crore a year back.
"Higher operating expenditures coupled with lower other
income actually reduced the headroom for making full provisions. Hence, there
is a year-on-year reduction in provisions. The bank could have provided full in
absence of those two components," Vaibhav Agrawal, vice president research,
Angel Broking told moneycontrol.com.
The growth in deposit book was muted. It rose just 3% y-o-y
to Rs 3.37 lakh crore. It was much below the industry projection of 15% in
FY13.
Capital adequacy ratio stood at 13.07% in the July-September
quarter as against 13.22% in the April-June quarter.
At 13:45 hours IST, Canara Bank shares were trading at Rs
416 on the NSE, down nearly 1%.
Source: www.moneycontrol.com
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
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