Canara Bank reported an 89% year-on-year rise in its net profit to Rs 2,525 crore for the July-September period as it rode high on strong credit growth and improved its asset quality.

The state-owned bank’s net interest margin (NIM) at 2.86% was the highest in nine quarters. In the year-ago quarter, NIM stood at 2.77% while in the preceding three months it was at 2.78%.

Canara Bank managing director and CEO LV Prabhakar said the bank is aiming at lifting NIM to 2.9% by the end of the year.

Net interest income, which is the net of interest earned and interest expended, rose by 18.5% to Rs 7,434 crore from Rs 6,273 crore a year ago.  Non-interest income grew 13% YoY to Rs 4,825 crore for the quarter ended 30 September 2022.

Total income rose to Rs 24,932.19 crore during July-September this year versus Rs 21,331.49 crore a year ago.

The bank said it has shifted to a new tax regime which helped it save Rs 2,451.6 crore in deferred tax.

 A provision for income tax of the previous financial year (2021-22) of Rs 1,578.2 crore has been reversed in the current period including Rs 443.1 crore on account of the change of regime, it said.

Provisions and contingencies rose 8% YoY and declined marginally sequentially to Rs 3,636.81 crore. The provision coverage ratio improved to 85.36% in Q2FY23.

The bank’s asset quality improved with gross non-performing assets (NPAs) declining to 6.37% (Rs 824,417 crore) of the gross advances as of 30 September 2022, compared to 8.42% a year ago. Gross NPAs fell by Rs 6,197 crore during the quarter, of which it wrote off Rs 2,798 crore. The bank had fresh slippages of Rs 3,523 crore during the quarter.

The bad loan outstanding on the corporate loan book was at Rs 369,225 crore, which is over 8% of the advances. Retail loan NPA was at Rs 134,051 crore (1.37%). NPAs from the home loan book stood at Rs 78,852 crore (0.77%) while outstanding bad loans in the vehicle loan portfolio was at Rs 14,743 crore (1.63%). Bad loans in the MSME segment stood at 124,295 crore (10.35%).

Net NPA fell to 2.19% from 3.22% at the end of the September 2021 quarter.

 The Bengaluru-based bank’s gross global advances grew 20% YoY to Rs 8.24 trillion while domestic advances reported a 17.66% YoY growth to Rs 7.80 trillion. The retail lending portfolio jumped 12. 5% YoY and the home loan book grew 17% YoY.

Domestic deposits grew 7.77% YoY to Rs 10,56,519 crore. The global business increased by 13.89% YoY to Rs 19,58,111 crore in the quarter with global deposits and global advances growing to Rs 11,33,964 crore and Rs 8,24,147 crore at 9.82% and 20% YoY, respectively.

The credit-to-deposit ratio improved to 72.68% from 66.52% a year ago and 70.09% in the preceding quarter.