Bengaluru-headquartered Canara Bank reported a 92% year-on-year rise in net profit to Rs 2,881.5 crore for the quarter ended December 2022 on the back of a healthy growth in advances, rise in interest income and fall in bad loans.

The state-run bank's net interest income (NII), which is the difference between the interest earned and expended, rose about 24% YoY to Rs 8,600 crore in the fiscal third quarter. 

Net interest margin (NIM) stood at 3.04%, up from 2.83% a quarter ago. The target is to keep our NIM at 3%, said Canara Bank executive director Satyanarayana Raju.

The non-interest income of the bank rose by 10.35% to Rs 3,986 crore.

Total income increased to Rs 26,218 crore in the December quarter from Rs 21,312 crore in the year-ago period.

“The profit of the bank is coming from a sharp rise in interest income, good growth in advances and better performing assets. We have about 38% of our loans linked to external benchmark, 49% linked to the marginal cost-based lending rate (MCLR) and over 80% are on floating rate,” said Raju.

On the asset quality front, Canara Bank's gross non-performing assets (NPAs) declined to 5.89% (Rs 50,143 crore) as against 6.37% in the preceding quarter. A year ago, gross NPAs stood at 7.80% (Rs 56,893 crore).

Net NPAs dipped to 1.96% from 2.19% a quarter ago and 2.86% a year ago.

The bank had recoveries and upgrades of Rs 2,716 crore during the quarter. The bank wrote off Rs 2,836 crore of bad loans and had fresh NPA additions of Rs 3,018 crore during the quarter.

The bank's provisions and contingencies fell to Rs 3,121 crore from Rs 3,636.8 crore quarter-on-quarter (QoQ) and Rs 2,244.8 crore a year ago. 

The provision coverage ratio (PCR) was 86.32 % in December 2022, up from 85.36% a quarter ago and 83.26% in December 2021. 

During Q3, the bank’s global business grew by 13.63% YoY to Rs 20,14,443 crore while global deposits stood at Rs 11,63,470 crore, up by 11.51%. Gross global advances increased by 16.65% to Rs 8,50,973 crore. 

The bank’s loans to the commercial real estate sector rose by 21% over the previous year to Rs 19,990 crore and incrementally also the exposure went up by Rs 3,440 crore.

The loans to the RAM sector also showed a healthy increase with a 13.81% growth to Rs 4,63,038 crore. The home loans rose by 15.81% to Rs 81,916 crore, gold loans by 34.21% to Rs 1,15, 286 crore. The fee-based income of the bank also improved by13.02% to Rs1,606 crore but declined sequentially by 6.95%.

"On the credit growth front, we saw equitable distribution in the corporate and RAM segments and this is likely to continue," Canara Bank executive director Debashish Mukherjee said.

Meanwhile, the domestic deposit of the bank stood at Rs 10,79,700 crore in Q3, an increase of 9.21% YoY. Its gross domestic advances rose 14.11% YoY to Rs 8,00,907 crore.

The bank’s capital adequacy ratio rose to 16.72% in December quarter as against 16.51% QoQ and 14.80% YoY.

Last week, Canara Bank said it entered into a share sale agreement with the State Bank of India (SBI) to sell its entire 40% stake in Commercial Indo Bank LLC (CIBL), Moscow, Russia.