Canara bank on Friday reported a net loss of Rs
4,859.77 crore for the fourth quarter ending March 2018 due to three-fold rise
in provisions towards bad loans. Bad loans surged
on account of the Reserve Bank of India’s circular on revised guidelines,
divergences in classification of non-performing assets (NPAs) and some pain in
the agriculture loans.
The government
bank received a tax expense write-back of Rs 2,450.62 crore, without which the
loss would have been steeper. This is the
second biggest quarterly loss reported by a public sector bank since the bad
loan clean-up exercise started in 2015. Previously, Punjab National Bank had
reported a loss of Rs 5367 Crore in March quarter ending 2016.
In the year-ago
period, the government bank had swung back to a profit of Rs 214
crore due to lower provisions and healthy non-interest income.Provisions during the
quarter shot up by 200 percent to Rs 8762.5 crore for the January to March
period 2018 from Rs 2924 crore in the same period last year.
Asset quality
During the quarter
under review, gross NPAs jumped to Rs 47,468 crore as on March end 2018, up 18
percent from Rs 40312 crore in the December quarter.
As a percentage of
total loans, gross NPAs worsened to 11.84 percent from 10.38 percent in the
preceding quarter and 9.63 percent in the year-ago period.
Net NPA ratio also
deteriorated to 7.48 percent of total loans from 6.78 percent in December and
6.33 percent in March 2017.
Divergence in bad loans
For FY17, Canara Bank
reported divergence in classification of gross NPAs worth Rs 3,248 crore as
compared to Reserve Bank of India’s assessment of its bad loans. Net NPA
divergence stood at Rs 1847 crore.
Divergence in
reporting of provisions was also reported at Rs 1401 crore.
Interest income
NII or net interest
income, the difference between interest earned on loans and that paid on
deposits, increased by 10.3 percent to Rs 2987 crore from Rs 2708 crore in the
same quarter last year.
Other income fell by
44 percent to Rs 1,332 crore crore from Rs 2396 crore in March quarter last
year.
Full financial results
For the full year
ending March 2018, the net loss stood at Rs 4,222.24 crore at the end of March
2018 as against a profit of Rs 1121.92 crore in FY17.
The
bank said it has not opted for availing the RBI dispensation for staggering of
the NPA
provisioning after the
recent RBI guidelines on stress recognition and resolution.
"It has front
loaded the NPA recognition and the consequent higher provisioning has consumed
the operating profit. The provisioning on account of NPAs has increased to Rs
13,770 crore during 2017-18 from Rs 7,792 crore during the previous year
(2016-17)," the bank said.
The
management has stated that with stress already nearly fully recognized, the
bank is poised for a stable and profitable growth during the current year.
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