Canara Bank Q4 net profit rises 18% on back of lower toxic assets

Bengaluru: State-owned lender Canara Bank, on Wednesday, reported an 18.3 per cent rise in net profit at Rs 3,757 crore for the January-March quarter (Q4FY24), on back of a reduction in bad loans. For the current financial year (FY25), the Bengaluru-headquartered bank expects credit growth at around 11-12 per cent.

The bank's board also recommended a dividend of Rs 16.10 per equity share (i.e., 161 per cent) of face value of Rs 10 each to the shareholders for 2023-24, subject to approval.

The bank’s profitability grew on the back of lower gross non-performing assets (NPA), which came in at 4.23 per cent as of end-March 2024, down from 4.39 per cent in the October-December quarter and from 5.35 per cent in the same period last year. The provision coverage ratio stood at 89.10 per cent in Q4 against 89 per cent in Q3 FY

Sharing the outlook for asset quality, Canara Bank Managing Director and Chief Executive Officer K Satyanarayana Raju said gross NPA should come down to 3.25 per cent while net NPA to touch 1 per cent by the end of FY25

The bank's net interest margin improved to 3.05 per cent from 2.95 per cent at the end of the previous fiscal. Given the prevailing high interest rate regime, Raju said the net interest margin would be in the range of 2.95-3 per cent during the current fiscal.

Asked about the impact of the RBI draft circular on provisioning for ongoing project finance, he said, "we are seeking clarifications, including the threshold limit and since this is draft guidelines so there will not be any impact on the bank".

The bank has an overall exposure of Rs 1.10 lakh crore related to project finance, he added. On the capital raising plan, Raju said the bank does not require growth capital to meet its credit and deposit expansion during the current fiscal.

"We are self-sufficient as far as capital adequacy ratio is concerned," he said.

Besides, he said, the bank’s plans to divest part of its stake in two of its subsidiaries - Canara HSBC Life Insurance and Canara Robeco Mutual Fund - through an initial public offering, are on track. These are different stages of approval and one of these could happen by the end of the current fiscal, he added.