Canara Bank Q3 Results: Stock falls 5% after core income misses estimates, margins under pressure

Shares of state-run lender Canara Bank Ltd. fell up to 5% on Thursday, January 29, in response to its December quarter results, which missed expectations on a key metric.

Net Interest Income (NII) or core income earned by the lender increased by 1.1% from last year to ₹9,252 crore. A CNBC-TV18 poll had projected the figure to be ₹9,453 crore.

Net profit grew 25.6% from last year to ₹5,155 crore, higher than the CNBC-TV18 poll estimate of ₹4,932 crore. However, it must be noted that the increase in profitability is also due to a higher other income component. Other income for the quarter increased by 36% year-on-year to ₹7,899.4 crore from ₹5,802 crore last year.

Asset quality for the lender saw improvement from the previous quarter. Gross Non-Performing Assets stood at 2.08% from 2.35% in September, while Net NPAs stood at 0.45% from 0.54% in the previous quarter.

Provisions at the end of the quarter saw a marginal increase to ₹2,414 crore from ₹2,354 crore in September.

In its investor presentation, Canara Bank reported a 13.6% growth in its global advances from the same quarter last year to ₹11.92 lakh crore, while global deposits were up by 12.95% year-on-year to ₹15.21 lakh crore. Both loan growth and deposit growth were higher than the guided range provided by the lender.

Fresh slippages during the quarter narrowed marginally to ₹1,857 crore from ₹2,031 crore in September, while write-offs stood at ₹3,120 crore, lower than the ₹3,463 crore in September.

Net Interest Margins (NIMs) during the quarter narrowed by 33 basis points from last year to 2.5% from 2.83% from last year.

Shares of Canara Bank are trading 4.8% lower after the earnings announcement at ₹150.20. The stock is up 66% in the last one year.