Canara Bank profitability takes a hit

November 07, 2012 12:52 am | Updated 12:52 am IST - BANGALORE:

Archana S. Bhaargava

Archana S. Bhaargava

Hit by higher operating costs and mounting non-performing assets (NPA), Canara Bank, on Tuesday, reported a 22 per cent decline in net profit during the second quarter ended September , 2012, to Rs.661 crore from Rs.852 crore in the corresponding quarter of the previous year.

Net interest income declined marginally from Rs.1,962 crore to Rs.1,957 crore. Net interest margin declined from 2.51 per cent to 2.35 per cent.

Executive Director Archana Bhargava admitted that margins were impaired by the “sluggish” market for loans, especially among large corporate borrowers. “The slippages in (loan) recoveries from certain larger accounts also affected the bank,” Ms. Bhargava said. She admitted that the bank’s loan book (Rs.2.15 lakh crore) remained virtually static during the quarter, when compared with a year earlier period. “We were hit by poor credit offtake in a sluggish market,” she said.

Profitability was also affected by the worsening NPA situation in the bank’s portfolio. Gross NPAs accounted for 2.58 per cent of total assets, deteriorating by more than 80 basis points when compared with a year earlier. Net NPAs, too, worsened, touching 2.12 per cent at the end of the last quarter, up 80 basis points. The ED said the bank’s performance was weighed down by the burden of “restructured assets,” which amounted cumulatively to Rs.15,000 crore. This included about Rs.6,000-crore dues from State electricity boards, she added.

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