Canara Bank profit up despite rise in employee costs
Canara Bank's net profit rose 27% to Rs 3656 crore in the quarter ended December 2023 due to fall in provisions and higher other income even as operating expenses increased.
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CEO K Satyanarayana Raju said the rise in operating expenses was due to the Rs 700 crore provisioning the bank had to make on employee wage revisions.
Operating expenses increased 23% to Rs 6907 crore largely due to higher employee costs.
The higher expenses results in a 2% drop in operating profits. However, the bank could show an increase in net profit due to a sharp 39% fall in total provisions to Rs 1899 crore.
Raju said strong loan growth in retail and agriculture segments helped the bank maintain margins and profitability.
«We are on our way to achieve the targeted 1.20% net NPA and a 90% provision coverage ratio. Our RAM portfolio which makes 56% of loans will also increase to 58% of our loan book as targeted,» Raju said.
Canara Bank's total advances increased 12% to Rs 9.50 lakh crore, led by 15% growth in loans to retail, agriculture and MSMEs (RAM).
Net interest income (NII) or the difference between the interest earned on loans and that paid on deposits increased 9% to Rs 9,417 crore.
Net interest margin (NIM) improved to 3.02% from 2.93% a year ago due to a strong growth high yielding RAM loan.
Retail loans grew by 12% while agriculture and allied activities grew by 19% year on year.
Net NPA ratio reduced 64 basis points year on year to 1.32%. One basis point is 0.01 percentage point.
Higher other income also helped the bank's profits. Other income increased 8% to Rs 4295 crore in December 2023 due to a 39% increase in recoveries from written off accounts to Rs
