Canara Bank announced dividend of Rs 6.50 per share as net profit in FY22 more than doubled to Rs 5,678.42 crore from Rs 2,557.58 crore a year ago.

 The state-owned bank has also given a 15% performance-linked incentive to its employees. "We have worked hard on this for the last two years, keeping in mind the interests of our shareholders and staff. The performance-linked incentive was credited to the accounts of the employees today itself. We wanted to encourage the employees for recording such a sharp rise in net profit," said Canara Bank managing director and CEO LV Prabhakar.

 Last year, the bank had also handed out a 15% performance-linked incentive to its staff when it reported a profit of Rs 2,557 crore, turning around from a net loss of Rs 2,236 crore in FY2020. 

 “Our efforts will continue in future as we target strong growth,” Canara Bank managing director LV Prabhakar said.  

 Though there is no fund requirement to support the projected credit growth of over 8% this fiscal, Canara Bank is looking to raise Rs 9,000 crore through a combination of additional tier-1 and tier-2 bonds.

 Prabhakar, however, ruled out plans for an equity expansion in FY23. "Our existing capital is good enough to support credit growth this fiscal. We are, however, planning to raise capital through bonds as it would further strengthen our balance sheet,” he said.

 The bank's capital adequacy ratio stood at 14.9% as of March 31, 2022.

 The Bengaluru-headquartered bank is eyeing a corporate loan book growth of 8% in FY23 while retail credit is expected to be over 10%. The bank already has a project pipeline of Rs 35,000 crore.

“Corporate demand is coming from renewable energy, health, steel, infrastructure and, to some extent, from power,” Prabhakar said.

In the previous fiscal, Canara Bank posted a loan growth of 9.77% to Rs 7.41 lakh crore.

The bank’s net profit for the fiscal fourth-quarter ended March jumped 65% to Rs1666.2 crore.

 Total income rose 6.1% to Rs 22,323.11 crore in Q4 FY22 from Rs 21,040.63 crore in the year-ago quarter.

The bank has guided its net interest margin (NIM) to improve to 2.9% in FY23. NIM in FY22 improved 6 basis points to 2.82%.

On the asset quality front, the bank's gross non-performing assets (NPAs) ratio fell to 7.51% at the end of March 2022, improving from 8.93% a year back. In value terms, the gross NPAs stood at Rs 55,651.58 crore, down from Rs 60,287.84 crore.

 “We want to bring down the gross NPAs to less than 6% by the end of FY23,” Prabhakar told reporters.

Net NPA stood at 2.65% (Rs 18,668.02 crore) in the quarter under review, versus 3.82% (Rs 24,442.07 crore) a year ago.

 The overall provisions rose 8% to Rs 4,536 crore during the quarter, but the money set aside for NPAs fell 52% to Rs 2,130 crore as the asset quality improved.

 However, there was a surge in provisions for non-performing investments in the March quarter, with Rs 1,035 crore being set aside, as against a write-back of Rs 244 crore a year ago.

 The fresh slippages fell to Rs 3,619 crore in the quarter ended 31 March 2022 versus Rs 14,495 crore in the year-ago quarter. This included Rs 800 crore in the MSME segment, Rs 600 crore in agriculture and Rs 550-600 crore in retail.

 The bank’s core net interest income in the March quarter rose nearly 25% to Rs 7,005 crore.

Total non-interest income fell 5.12% to Rs 4,462 crore, mainly due to a sharp decline in recoveries from written-off accounts compared to the year-ago period.

The bank is targeting to raise the proportion of the low-cost CASA (current account and savings account) deposits to 38% from the current 36%. “We have been historically low in CASA, which was at 30% a couple of years back. We will be more aggressive in mopping up retail deposits,” said Prabhakar.