Canara Bank has reported a net profit of Rs. 876 crore during the third quarter ended December 31, 2011, a decline of 26 per cent on an annualised basis. Announcing the results on Friday, Chairman and Managing Director S. Raman said but for provisioning for an “impaired asset,” and higher depreciation of investments, profitability would have been higher during the quarter.
Total income was higher at Rs.8,591.15 crore against Rs.6,444.55 crore.
Mr. Raman admitted that profitability was also affected by the higher interest expenditure, which reflected the cost of deposits mobilised by the bank. Interest costs increased by 56 per cent on an annualised basis during the quarter.
Compared to a year ago deposits increased by 19.7 per cent during the quarter; advances increased by 15.5 per cent during the same period.
The bank's net interest margin (NIM) during the quarter was 2.64 per cent, down from 3.21 per cent a year earlier.
Mr. Raman said the bank's NIM are at “reasonable levels”. “Regulators look down on very high levels of NIM,” he observed.
Gross non-performing assets (NPA) were at Rs. 3,999 crore, 45 per cent higher than a year earlier.
The net NPA ratio worsened from 1.05 per cent to 1.49 per cent during this period.
“We have been careful in choosing our accounts this year,” Mr. Raman said.
Banks, Mr. Raman said, were well placed to ‘capitalise' on the opportunities that may arise from the recent reduction in the cash reserve ratio by the central bank. “My reading is that we are at the end of the interest rate cycle.”. “If inflation does not subside we may see more action on the CRR front,” Mr. Raman said.