Canara Bank shocks the street; posts Net Loss

The Indian state owned bank, Canara Bank has posted a massive net loss in its Q4FY16 amid more than a fourfold rise in the provisions for bad loans. The stock of Canara Bank has declined 2.3 per cent and closed at 194.8 levels ahead of the results.

On the financial front the bank’s standalone Interest earned has remained flat to negative at Rs 10732.91crore this quarter as against Rs 10882.07 crore in Q3FY16. The Interest expended too has dropped to Rs 8359.15 crore as against Rs 8655.47 crore for Q3FY16, a decrease of 23.4 per cent. Thereby the Net Interest Income has risen by 6.6 per cent to Rs 2373.76 crore as compared to Rs 2226.6 crore in the last quarter.

Company has posted a net loss of Rs 3905.49 crore in Q4FY16 as against a profit of Rs 84.97 crore last quarter. The loss is in the wake of a rise in provisions to Rs 6331.54 crore as against Rs 1428.85 crore.

On asset quality front, Canara Bank's bad loans have worsened in Q4FY16. Bank’s per cent of Gross NPA has increased and stands at 9.4 per cent as compared to 5.84 per cent in the last quarter. Per cent of Net NPA has risen on the same lines at 6.42 per cent as against 3.9 per cent earlier.

On a yearly basis Interest earned stands flat at Rs 44039.49 crore for the year ended March 2016 as against Rs 43813.37 crore in the previous year. Interest Expended too has remained flat at Rs 34262.99 crore as against Rs 34133.12 for FY15.

Yearly Provisions too have increased from Rs 3464.39 crore in FY15 to Rs 10364.63 crore in FY16, an increase of almost 200 per cent. Thereby Bank has posted a yearly net loss for the first time at Rs 2670.29 crore.

Bank’s per cent of Gross NPA for the year ended March 2016 has increased at 9.44 as compared to 3.92 in the previous year. Bank’s per cent of Net NPA has risen, but at a lesser pace as compared to gross NPA, at 6.44 as against 2.86 earlier.

Canara Bank deals in personal banking, corporate banking, non-resident Indians (NRIs) banking, Internet banking, and priority and small and medium enterprises (SME) banking services. The Bank has four business segments: treasury operations, retail banking operations, wholesale banking operations and other banking operations. It mainly provides services to central and state governments.