Canara Bank reported a nearly three-fold jump in its fiscal first quarter net profit to Rs 1,177 crore on the back of a surge in fee income and treasury gains. In the year-ago quarter, the bank’s net profit stood at Rs 406 crore.

The bank's non-interest income, including fees and treasury gains, grew 67.47% year-on-year to Rs 4,438 crore. Net interest margin (NIM) declined to 2.71% in the June quarter from 2.84% a year ago.

Net interest income rose by 0.84% to Rs 6,147 crore. Total income also increased marginally to Rs 21,210.06 crore, from Rs 20,685.91 crore a year ago.

Asset quality improved with the gross non-performing assets (NPAs) ratio at 8.50% as against 8.84% a year ago. The net NPA ratio stood at 3.46% compared to 3.95%.

Total provisions rose 17.89% YoY to Rs 4,574 crore in the June quarter. This included a one-time income tax provision of Rs 845 crore. Covid-related provisions were at Rs 842 crore.

Provision Coverage Ratio (PCR) improved to 81.18% from 78.95% a year ago.

Fresh slippages during the quarter were at Rs 4,253 crore, down sharply on a sequential basis. Of the total slippages, 18-19% came from the retail segment and 55-66% from MSMEs. Loans worth Rs 13,234 crore were restructured under the Covid-2 scheme, of which Rs 7,610 crore came from the retail sector and Rs 3,331 crore from MSMEs.

“Some of the retail and MSME borrowers whom we brought under the Covid recast scheme have started to pre-pay. We are hopeful that as the business momentum picks up, a large part of these accounts will normalise. As of 30 June, our collection efficiency is 91%,” said Canara Bank managing director and CEO LV Prabhakar.

Going forward, the stress should not be more than Rs 4,000-4,500 crore in the second quarter, he added.

Canara Bank expects fresh slippages of Rs 14,000-15,000 crore during the entire fiscal.

Cash recovery in the quarter stood at Rs 1,598 crore and the bank upgraded Rs 2,292 crore of loans. Prabhakar said at the start of FY22 the bank had given a recovery target of Rs 10,000 for the full year, but the number will be achieved much before March-end.

Total loans grew by 5.94% to Rs 6.6 lakh crore, of which retail loans grew at 9.57% and agriculture loans by 17.03%. The bank targeting a credit growth of 7.5% in FY22.

Domestic deposit grew 11.6% to Rs 9,70,481 crore in the quarter ended 30 June 2021.