BANGALORE: Canara Bank's business volume crossed the Rs. 4-lakh crore mark for the first time, in 2009-10. The bank reported a 46 per cent increase in net profit at Rs. 3,021 crore during the full year, despite a 30 per cent dip in net profit in the fourth quarter, mainly on account of higher provisioning.
It made an operating profit of Rs. 5,061 crore, an increase of 28 per cent over the previous year. Total business volume was Rs. 4.04 lakh crore, an increase of 24 per cent. While deposits increased by 26 per cent, net advances rose by 23 per cent in 2009-10.
Announcing the results for 2009-10 on Wednesday, Chairman and Managing Director A. C. Mahajan said the bank's profit was lower because of the higher provisioning it had made for the wage hike for employees as well as for non-performing assets (NPA). “We have fully provided for the wage hike that was announced on Monday,” Mr. Mahajan said. Total provision in 2009-10 amounted to Rs. 2,039 crore, including NPA provisions amounting to Rs. 1,408 crore. Net NPAs amounted to Rs. 1,800 crore at the end of the year. “We have acted prudently by providing for almost 78 per cent of our NPAs against the Reserve Bank of India stipulation of 70 per cent coverage of NPAs,” Mr. Mahajan said.
“Although credit growth has been slow during the year, we have managed to increase the net interest margin from 2.78 per cent in 2008-09 to 2.83 per cent,” he said. The margins were better because the bank managed to reduce its cost of deposits from 6.87 per cent in 2008-09 to 6.12 per cent in 2009-10 and by curtailing the increase in expenses to just 7 per cent.