Canara Bank Q2 Results: PSU stock jumps after 20% core income growth, asset quality improves

Shares of Canara Bank Ltd.,

the state-run lender, gained as much as 4% on Wednesday, October 14, in response to its September quarter results, that were better on a year-on-year basis across key parameters and also saw an improvement in its asset quality.

Canara Bank reported a net profit of ₹5,175 crore for the September quarter, which is 9% higher than the ₹4,774 crore figure it reported during the same quarter last year.

The lender's core income or Net Interest Income (NII) saw a 20.4% growth on a year-on-year basis, crossing the ₹11,000 crore mark at ₹11,004 crore, compared to the ₹9,141 crore figure in the base quarter.

Asset quality for Canara Bank also improved on a sequential basis, with gross NPA improving to 1.33% from 1.57% in June, and Net NPAs improving to 0.3% from 0.36% in the previous quarter.

In absolute terms, Canara Bank's Gross NPA improved to ₹18,298.95 crore from ₹20,354.34 crore, while Net NPA improved to ₹4,053.19 crore from ₹4,652.95 crore.

A decline in provisions also contributed to Canara Bank's improved profitability during the quarter. At the end of September, provisions for Canara Bank stood at ₹3,583 crore from ₹3,780 crore in June.

Fresh slippages for the quarter saw a marginal increase to ₹1,844 crore at the end of September, from ₹1,781 crore at the end of the June quarter.

In its business update announced earlier this month, Canara Bank had reported a 19.3% loan growth for the September quarter to ₹13.73 lakh crore. The number was up 6.2% on a sequential basis as well.

Deposit growth for the quarter stood at 13.1% year-on-year to ₹16.97 lakh crore, which was also up 5% from the previous quarter.

Shares of Canara Bank are trading 4% higher after the results announcement at ₹125.17. The stock is down 19% on a year-to-date basis so far.