Canara Bank made a net profit of Rs. 911 crore in the second quarter of 2009-10, against Rs. 529 crore in the year-ago period, an increase of 72 per cent. It made an operating profit of Rs. 1,419 crore during the quarter, an increase of 83.5 per cent over the previous year.

The bank's total income rose by 26 per cent during quarter under review to Rs. 5,602 crore.

Announcing the results, A. C. Mahajan, Chairman and Managing Director, said the bank had maintained its net interest margin at 2.66 per cent as compared to 2.7 per cent a year ago.

"We have been able to achieve this by reducing our dependence on bulk deposits and on hot money and by shifting our focus to retail deposits," he said. The bank had added 10-lakh new customers since April 2009, he added. The bank's cost of deposits has declined from 6.63 per cent in September 2008 to 6.47 per cent in September 2009.

Mr. Mahajan said he expected this to decline by about 6.15 per cent by December and to 6 per cent by the end of the current financial year.

Deposits amounted to Rs. 2.04 lakh crore at the end of the second quarter, an increase of 19 per cent on an annualised basis. Net advances increased by 23 per cent to Rs. 1.46 lakh crore. Aggregate business crossed the Rs. 3.50-lakh crore-mark to reach Rs. 3.51 lakh crore, an increase of 21 per cent year-on-year.

Advances to the SME (small and medium enterprises) sector increased by 33 per cent during the quarter. Lending to agriculture rose 20 per cent.

Referring to the bank's housing loan portfolio, Mr. Mahajan said it would "concentrate on the retail loans instead of lending through intermediaries."

Asked if the bank would suffer losses if interest rates harden, he said the "mark-to-market losses are unlikely because our investment portfolio is fairly resilient." He pointed out that about 24 per cent of the bank's portfolio was held-to-maturity category on which the bank would not be required to make provisions for losses. The bank made a net profit of Rs. 1,466 crore in the first half of 2009-10, an increase of 125 per cent over the previous year.

More In: Companies | Business