Canara Bank’s net profit rose 27% to Rs 3656 crore in the quarter ended December 2023 on a fall in provisions and higher other income even as operating expenses rose.
CEO K Satyanarayana Raju said the increase in operating expenses was due to the Rs 700 crore provision the bank had to make on employee salary revisions.
Operating expenses increased 23% to Rs 6907 crore mainly due to higher staff costs.
The higher expenses result in a 2% drop in operating profits. However, the bank could show an increase in net profit due to a sharp 39% fall in total provisions to Rs 1899 crore.
Raju said strong loan growth in retail and agriculture segments helped the bank maintain margins and profitability.
“We are on track to achieve the targeted 1.20% net NPA and 90% provision coverage. Our RAM portfolio, which makes up 56% of loans, will also increase to 58% of our loan book as targeted,” Raju said.
Canara Bank’s total advances increased 12% to Rs 9.50 lakh crore, led by a 15% growth in loans to retail, agriculture and MSMEs (RAM).
Net interest income (NII) or the difference between the interest earned on loans and that paid on deposits increased 9% to Rs 9,417 crore.
Net interest margin (NIM) improved to 3.02% from 2.93% a year ago due to strong growth high yield RAM loan.
Retail loans grew by 12% while agriculture and related activities grew by 19% year-on-year.
Net NPA ratio reduced 64 basis points year-on-year to 1.32%. One basis point is 0.01 percentage point.
Higher other income also helped the bank’s profits. Other income increased 8% to Rs 4295 crore in December 2023 due to a 39% increase in recoveries from written off accounts to Rs 1655 crore.
Raju said the bank will try to keep slippages below the recoveries and upgrades in the immediate future.