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Published: August 15, 2024
Updated: August 15, 2024

Canara Bank

Buoyant growth at home & abroad: NPA ratio on downward pathyears

Analysing the performance of the bank during Q1FY25, K Satyanarayana Raju, MD and CEO, said at a conference call that global business stood at Rs 23,10,350 crore, suggesting a growth of 11.07%. Gross advances stood at Rs 9,75,183 crore, a growth of 9.86%. Global deposits stood at Rs 13,35,167 crore, indicating a growth of 11.97%. Net profit stood at Rs 3,905 crore. Return on assets stood at 1.05%, improving by 6 bps. RAM credit grew by 12.26%. Retail credit grew by 23.54 %, with housing loans at 11.90 % and vehicle loans at 15.49%. The bank improved its business to Rs 23.1 lakh crore, driven by a 10% growth in deposits and a 12% rise in credit by end- June 2024.

Global business increased by 11.07% (yoy) to Rs 23,10,350 crore as at end-June 2024, with global deposits at Rs 13,35,167 crore by 11.97% (yoy) and global advances (gross) at Rs 9,75,183 crore by 9.86% (yoy). Domestic deposits of the bank stood at Rs 12,31,184 crore as on June 2024 with a growth of 11.47% (yoy). Domestic advances (gross) grew by 9.17 per cent to Rs 9,20,334 crore. RAM credit increased by 12.26% (yoy) to Rs 5,51,750 crore. The retail lending portfolio increased by 23.54% (yoy) to Rs 1,75,794 crore as at June 30, 2024. The housing loan portfolio rose by 11.90% (yoy) to Rs 96,108 crore.

Loan growth has eased due to the shedding of low-yielding advances. However, the loan growth for retail, agriculture and MSME (RAM) has been healthy at 12% and its share rose to 57% at end-June 2024.

CREDIT COST

Credit cost declined by 20 bps yoy to 0.9% in Q1FY2025. The credit-deposit ratio stands at 73.04% at end-June 2024. The bank has reduced its GNPA ratio by 9 bps qoq to 4.14% and its NNPA by 3 bps qoq to 1.24% at endJune 2024. The bank has witnessed an increase in the average cost of incremental deposits to above 7.5%, while it is expected to remain elevated due to liquidity concerns.

The yield on advances has been slightly impacted due to reclassification of ‘penal interest income’ to ‘other income’ leading to a 6 bps decline in yield to 8.66% in Q1FY2025. About 51% of the loan book is linked to MCLR and 38% to RRLR. The bank has witnessed conversion of Rs 15,000 crore of current account deposits received in Q4FY2025 to bulk deposits in Q1FY2025.

STAFF WAGES

The bank has created full provision for an employee wage hike at the rate of 17%. Segment-wise, agriculture contributed fresh slippages of Rs 900 crore, MSME Rs 1,220 crore, retail Rs 500 crore and corporate Rs 600 crore. The restructured loan book has declined to Rs 16,000 crore, of which the standard book is Rs 1,100 crore at end-June 2024.

There has been an increase in the SMA-0 loan book due to exposure to one PSU company in Andhra Pradesh. The bank has sufficient capital adequacy ratio and does not require capital raising. It expects divestment in Canara Robeco in Q4FY2025, which will support the capital adequacy ratio.

The bank has maintained the guidance of 10% growth in deposits and advances. It aims to reduce its GNPA ratio to 3.5% and NNPA ratio to 1.1%, while raising PCR to 90% by end-March 2025.

WIDE REACH

As on June 2024, the bank has 9,623 branches, out of which 3,106 are rural, 2,760 semi-urban, 1,914 urban and 1,843 metro, along with 10,014 ATMs. It also has 4 overseas branches in London, New York, Dubai and Gift City.

November 30, 2024 - Second Issue

Industry Review

VOL XVI - 06
November 16-30, 2024

Formerly Fortune India Managing Editor Deven Malkan Assistant Editor A.K. Batha President Bhupendra Shah Circulation Executive Warren Sequeira Art Director Prakash S. Acharekar Graphic Designer Madhukar Thakur Investment Analysis CI Research Bureau Anvicon Research DD Research Bureau Manager (Special Projects) Bhagwan Bhosale Editorial Associates New Delhi Ranjana Arora Bureau Chief Kolkata Anirbahn Chawdhory Gujarat Pranav Brahmbhatt Bureau Cheif Mobile: 098251-49108 Bangalore Jaya Padmanabhan Bureau Chief Chennai S Gururajan Bureau Chief (Tamil Nadu) Ludhiana Ajitkumar Vijh Bhubaneshwar Braja Bandhu Behera

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