Canara Bank expects slippages of Rs 12,000 Crore in coming quarters

Canara Bank’s slippages are expected to be around Rs 12,000 crore in the coming quarters, said MD and CEO LV Prabhakar, adding that the amount would be less than Rs 3,000 crore per quarter.

“At the start of the financial year, I had given an indication that in 12 months slippages will be around Rs 15,000 crore – that’s the maximum – and recoveries will be more than that. So whatever restructured book there is and the 6-7% slippage that will be there is already accounted for,” Prabhakar said in an interview with CNBC-TV18.

Slippages are standard assets that become non-performing assets (NPA) due to borrowers not paying interest for more than 90 days.

The MD’s comments came after Canara Bank reported its earnings for the first quarter of fiscal 2023 with slippages at Rs 3,600 crore.

Future Retail slid into non-performing assets in the June quarter, Prabhakar said, adding that the bank is very selective in corporate funding. The risk weighting has fallen from 76% to 69%, he added.

Overall, the bank released a good set of numbers, with standalone net profit jumping 72% to Rs 2,022 crore in the first quarter due to healthy core revenue growth and lower doubtful debts. The bank had recorded a net profit of Rs 1,177.47 crore in the prior year period.

Its revenue jumped to Rs 23,351.96 crore in the June quarter from Rs 20,940.28 crore in the same period a year ago. Basic income from interest generation increased by 8.3% to Rs 18,176.64 crore.

The lender’s asset quality improved as gross NPAs fell to 6.98% of gross advances from 8.50% in the same period last year. Net bad debts fell from 3.46% to 2.48%.

“The restructured book is now a story…So the restricted book, going forward, won’t matter much and net slippages and net recoveries will be the deciding factors for gross NPA and net NPA,” did he declare.

However, the provision (other than tax) – the bank recognizing a loss on the loan in advance – for bad debts and contingencies increased to Rs 3,690 crore from Rs 3,458.74 crore a year ago. year.

Canara Bank’s share was trading down 1.25% at Rs 221.90 per share at the time of writing.

Canara Bank expects slippages of Rs 12,000 Crore in coming quarters

Regarding allegations of wrongdoing at Can Fin Homes, he said: “We believe in one principle at Canara Bank and we apply this principle in all our subsidiaries – ‘Compliance First, Business Next’… Can Fin Homes is the one of the best branches we have and we had all 200 branches audited and there were about 23 other accounts amounting to about Rs 2.4 crore which are declared as NPA and 100% expected.”

Canara Bank expects slippages of Rs 12,000 Crore in coming quarters

Prabhakar expects strong growth from the Can Fin Homes subsidiary in the future. He said the lender will consider monetizing the stake in the subsidiaries when the valuation is correct.

First post: STI


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