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Home > Finance News > Canara Bank restructures loans worth Rs 13,000 crore, MSME, retail worst hit

Canara Bank restructures loans worth Rs 13,000 crore, MSME, retail worst hit

Public sector lender has restructured loans of over Rs 13,000 crore as MSME and retail loans took a beating due to the second Covid wave. Fresh slippages came at Rs 4,253 crore which fell sharply on a sequential basis, 19% of the slippages came from the retail segment and 56% came from MSMEs. The bank also restructured loans worth Rs 13,234 crore under the Covid 2.0 recast scheme, out of this Rs 7,610 crore worth of loans were recast from the retail sector while Rs 3,331 crore came from MSMEs. Special mention category loans or which are due beyond 0-90 days stood at Rs 23,985 crore.

“For the retail and MSMEs borrowers who we have assisted with the Covid recast scheme a part of them have started to pre-pay and we are hopeful that as business momentum recovers a large part of these accounts will normalise,” said L.V. Prabhakar, MD, Canara Bank. “As of June 30, our collection efficiency is 91%, which means instalments are coming. There was stress which was duly addressed by giving them recast benefit.”

Profits nearly tripled to Rs 1,177 crore at the end of the June quarter as fee income and treasury gains grew sharply. The lender had reported profits of Rs 406 crore in the corresponding period last year. Though it’s net interest income was flat at Rs 6,147 crore from Rs 6,096 crore in Q1FY21.

Non-Interest Income which includes fees and treasury gains was up by 67.47% to Rs 4,438 crore in the June quarter versus Rs 2,650 crore a year ago.

The bank reported improvement in asset quality metrics. It’s GNPA ratio came at 8.50% for the quarter under review from 8.84% a year ago. Net NPA ratio was at 3.46%.

Total provisions rose nearly 18% to Rs 4574 crore at the end of the June quarter versus Rs 3880 crore a year ago. This included a one time income tax provision of Rs 845 crores. The bank also holds Covid related provisions of Rs 842 crore.

It’s total loans grew by 5.94% to Rs 6.6 lakh crore, out of which retail loans grew at 9.57% while agriculture loans rose 17.03%. The bank said it is targeting an annual credit growth rate of 7-8%.

Net Interest Margin for the reporting quarter fell to 2.71 per cent for Q1FY22 as against 2.84 per cent for Q1FY21.

The bank’s asset quality profile improved with gross non-performing assets down to 8.5 per cent in June 2021 from 8.84 percent during Q1FY21. The net NPA also dipped to 3.46 per cent during the quarter from 3.95 per cent in June 2020.

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