However, the bank has continued to witness decline in net interest income for third straight quarter, while the bank has also showed moderation in business growth. The bank has posted 5% growth in its business volume driven by 9% increase in deposits and mere 1% rise in loans end December 2019.
Asset quality improves: The bank has exhibited improvement in asset quality with the strong recoveries of loans, while fresh slippages of loans were higher in Q3FY2020.
The fresh slippages of loans increased to Rs 4816 crore in Q3FY2020 from Rs 2602 crore in Q2FY2020.
The recoveries of NPAs was healthy at Rs 4584 crore and upgradations at Rs 110 crore, while the write-off loans stood at Rs 2188 crore in Q3FY2020.
The Bank has made a significant recovery of Rs 3451 crore in the account of Essar Steel through NCLT resolution. Overall recovery through resolution in NCLT cases stood at Rs 3494 crore in FY2020 so far (till Q3) as compared to Rs 2574 crore in FY2019.
The bank has 264 accounts with the exposure of Rs 34063 crore under NCLT with provisions coverage ratio of 80%.
The bank has improved provision coverage ratio improved to 71% end December 2019 from 70.1% end September 2019.
The SMA 2 category loan book of the bank has declined to 1.04% end December 2019 from 1.56% end September 2019.
The capital adequacy ratio of the bank stood at 13.86% with Tier I ratio at 11.05% end December 2019.
Business highlights:
The total business of the bank has increased 5% to Rs 1063450 crore end December 2019, driven by 9% increase in deposits to Rs 625240 crore. The loan book of the bank has moved up 1% to Rs 438210 crore. The CD ratio of the bank has declined to 70.1% end December 2019 from 73.2% a quarter ago and 75.7% a year ago.
The CASA deposits ratio of the bank has improved on sequential basis to 30.9% end December 2019 from 30.5% end September 2019.
The loan book of the bank has moved up 1% to Rs 438210 crore end December 2019 with 8% growth in the priority sector loans to Rs 216353 crore, while the non-priority sector loans dipped 6% to Rs 221857 crore end December 2019.
The priority and retail loans increased 10% to Rs 279015 crore, while corporate credit decline 14% to Rs 152613 crore end December 2019. The retail loan book of the bank has surged 22% to Rs 88228 crore driven by 21% growth in housing loans, auto loans 23% and other personal loans 26%.
The investment book of the bank has moved up to Rs 163044 crore end December 2019 with HTM book at Rs 104619 crore, AFS at Rs 58252 crore and HFT at Rs 173 crore end December 2019. The modified duration of AFS book stood at 2.21 year and entire portfolio at 4.65 years.
The non-interest income of the bank has increased 28% to Rs 1707 crore, driven by surge in treasury income to Rs 160 crore and profit on foreign exchange to Rs 261 crore. The core fee income of the bank has also improved to Rs 1028 crore, while recoveries in written off accounts moved up to Rs 251 crore in Q3FY2020.
The bank has witnessed rise in the net interest margin to 2.36% in Q3FY2020 from 2.21% in Q2FY2020, driven by 11 bps qoq rise in yield on funds to 7.14%, while cost of funds dipped 11 bps qoq to 5.14% in Q3FY2020.
The bank has network of 6328 domestic branches, 5 overseas branches and 8873 ATMs end December 2019. Bank has also engaged 5240 business correspondents' agents (BCAs) since November 2018 as additional customer touch points.
The clientele base of the bank has increased to 9.13 crore, of which deposits customer base stands at 8.15 crore and borrowal customers at 0.98 crore end December 2019.
The credit cost of the bank has declined to 1.86% in Q3FY2020 from 2.11% in Q2FY2020 and 2.32% in Q3FY2019.
Book value of the bank stood at Rs 362.3 per share, while adjusted book value (net of NNPA) was at Rs 155.26 per share end December 2019.
Financial Performance 9MFY2020
For the nine months ended December 2019 (9MFY2020), the bank has posted 14% growth in net profit to Rs 1023.61 crore. The net interest income declined 11% to Rs 9805.39 crore, while non-interest income moved up 20% to Rs 5638.20 crore in 9MFY2020. The expense ratio rose 115 bps yoy to 52.61% in 9MFY2020. The operating expenses rose 1% to Rs 8124.64 crore, while provision and contingencies dipped 22% to Rs 5740.01 crore in 9MFY2020. The profit before tax jumped 609% to Rs 1578.94 crore in 9MFY2020. Considering an effective tax rate of 35.17%, the net profit moved up 14% to Rs 1023.61 crore in 9MFY2020.
Canara Bank: Financial Results
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