Canara Bank quarterly net profit nearly doubles as lender shifts to new tax regime — shares jump

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Canara Bank on Thursday reported a net profit of Rs 2,525 crore for the July-September period, beating Street estimates by a wide margin, boosted by strong loan growth and improvement in asset quality. The state-run lender's quarterly net profit jumped 89.5 percent compared with the corresponding period a year ago,

Its net interest income — or the difference between interest earned and interest paid — increased 18.5 percent to Rs 7,434 crore, according to a regulatory filing.

Analysts in a CNBC-TV18 poll had predicted the lender's quarterly net profit at Rs 1,948.6 crore and net interest income at 7,333.6 crore.

Its net interest margin (NIM) — a key measure of profitability for financial institutions — hit a nine-quarter high of 2.83 percent.

The lender's international business outpaced its domestic business sequentially for the sixth quarter in a row.

Canara Bank's asset quality improved. Its gross non-performing assets — or bad loans as a percentage of total loans — came down to 6.37 percent in the quarter ended September from 6.98 percent in the previous three months.

Its net non-performing assets shrank 6.6 percent sequentially to Rs 17,286 crore, and provisions  came down to Rs 3,637 crore in the July-September period from Rs 3,690 crore in the previous quarter.

Canara Bank shifted to a new tax regime that led to a reduction of Rs 2,451.6 crore in deferred tax. The lender said it adopted new tax regime rates as per Section 115BAA of the Income Tax Act with effect from Assessment Year 2022- 23.

A provision for income tax of the previous financial year (2021-22) of Rs  1,578.2 crore has been reversed in the current period including

Rs.443.1 crore on account of the change of regime, it said.

Canara Bank shares made it to the green after the earnings announcement, rising as much as 2.8 percent to Rs 257 apiece on BSE.