Canara Bank Q4 Results: Profit Rises 18% On Higher Core Income, Lower Provisions

Canara Bank reported 18.3% rise in its standalone net profit in the fourth quarter of fiscal 2024 to Rs 3,757 crore, on account of increased net interest income and a drawdown in provisions.

Analysts polled by Bloomberg had pegged the bottom line at Rs 3,744.57 crore for the quarter.

On a sequential basis, the net profit of the lender grew 2.7%.

Canara Bank Q4 FY24 Results (Standalone)

• Net profit up 18% to Rs 3,757 crore (YoY).

• Net interest income up 11.2% to Rs 9,580.2 crore (YoY).

• Gross NPA at 4.23% versus 4.39% (QoQ).

• Net NPA at 1.27% versus 1.32% (QoQ).

Net interest income, or core income, rose 11.2% to Rs 9,580.2 crore in the quarter under review. The bank's net interest margin, a key indicator of profitability, improved to 3.05% for the quarter from 3.02% in Q3. The cumulative margin for FY24 stood at 2.95%.

Provisions held by the bank declined nearly 20% year-on-year to Rs 2,481.8 crore in the March quarter. Credit costs fell 21 basis points year-on-year to 0.96% during the period.

However, on a sequential basis, provisions increased by 30.7% as the bank set aside Rs 300 crore for a particular account to mitigate future default risks, according to K Satyanarayana Raju, managing director and chief executive officer of Canara Bank.

Provision coverage ratio improved to 89.10%, as of March 31, up 179 bps from the previous quarter.

Operating expenses, however, increased 20.7% year-on-year to Rs 7,410 crore during the quarter. Of this, employee costs rose 20% year-on-year to Rs 4,458 crore in Q3, on account of provisions against the bipartite settlement between Indian Banks' Association and employees on wage revision, the CEO said.

"We have made 100% provisions for retirement benefits, pension benefits, gratuity benefits. Last quarter, we had said we would need to make provisions worth Rs 150-200 crore. But, we have made provisions of Rs 350 crore in this quarter to provide fully, so that there is no burden next quarter onwards," Raju said.

On expenses related to technology, the bank has earmarked Rs 800 crore for capex requirements in FY25.

The bank's domestic advances grew 11.06% YoY to Rs 9.08 lakh crore during the quarter, driven by 13.5% growth in retail, agriculture and MSME loans. The bank management expects credit growth of 11-12% in FY25.

Further, domestic deposits rose nearly 11% YoY to Rs 12.1 lakh crore. Going forward, the deposit growth is seen at 9%. Canara Bank's credit-deposit ratio in Q4 stood at 73.20%, from 75.26% in the previous quarter.

"We are generally conservative on our guidance of credit and deposit growth," Raju told reporters in a post-earnings media call.

Owing to Reserve Bank of India's draft regulations on project finance, Raju said he does not expect "too much pressure" on core capital and margin of the bank, as the cost burden will be passed onto customers.

Canara Bank's total exposure to project finance stood at Rs 1-1.10 lakh crore at the end of the March quarter. However, the provision requirement of 5% proposed by RBI is not applicable on the entire portfolio, as it includes various categories, Raju said.

The bank is also seeking clarification on these regulations from the central bank to assess the financial impact of the circular on its balance sheet, he said.

The board recommended a dividend of Rs 16.10 per share for FY24, subject to shareholders' approval.