Canara Bank’s FY24 Performance: Profits Surge by 18%, NPA Ratio Declines, Dividend of Rs 16 Declared

Canara Bank, one of India’s leading public sector banks, recently released its financial results for the fourth quarter of the fiscal year 2023-24. The bank’s performance metrics provide valuable insights into its operational efficiency, asset quality, and strategic initiatives.

Global and Domestic Business Expansion

Canara Bank’s global business flourished in Q4 FY24, registering an expansion of 11.31% year-on-year (YoY) to Rs 22,72,968 crore as of March 2024. This growth was driven by a surge in both deposits (11.29% YoY to Rs 13,12,366 crore) and advances (gross) (11.34% YoY to Rs 9,60,602 crore). Domestically, the bank’s deposit base witnessed a growth of 10.98% YoY to Rs 12,14,951 crore, while domestic advances (gross) increased by 11.06% YoY to Rs 9,08,182 crore as of March 2024. These figures signal Canara Bank’s ability to tap into both domestic and international markets for growth.

Profitability on the Rise

Canara Bank’s profitability improved in Q4 FY24, with a net profit of Rs 3,757 crore, reflecting an 18.33% YoY increase. This growth was supported by a rise in net interest income (11.18%) and improved margins. The bank’s net interest margin (NIM) expanded by 10 basis points (bps) to 3.05%, indicating its efficiency in generating income from its interest-earning assets. Additionally, Canara Bank’s return on assets (ROA) improved by 20 bps to 1.01%, and return on equity (ROE) witnessed a significant improvement of 257 bps to 22.06%. These metrics suggest that the bank is effectively utilizing its resources to generate profits for its shareholders.

Dividend Recommendation

The Board of Directors has recommended a dividend of Rs. 16.10 per equity share (i.e., 161% of the face value of Rs. 10 per share) for the year ended on 31.03.2024, subject to requisite approvals. This dividend payout underscores the bank’s commitment to rewarding its shareholders while maintaining financial stability and growth.

Enhancing Asset Quality

Canara Bank’s asset quality continued to improve in Q4 FY24. The gross non-performing assets (GNPA) ratio declined to 4.23% as of March 2024, compared to 4.39% in December 2023 and 5.35% in March 2023. This represents a 1.12 percentage point decrease YoY. Similarly, the net non-performing assets (NNPA) ratio decreased to 1.27% from 1.32% (December 2023) and 1.73% (March 2023). This positive trend indicates the bank’s effectiveness in managing its loan portfolio and reducing the level of bad loans. The provision coverage ratio (PCR) also improved to 89.10%, demonstrating the bank’s enhanced provisioning buffer to cover potential loan losses.

Strong Capital Adequacy

Canara Bank’s capital adequacy ratio (CRAR) remained healthy at 16.28% as of March 2024, exceeding the regulatory requirement. This ratio signifies the bank’s ability to absorb potential losses without impacting its solvency. Tier-1 capital stood at 13.95%, and the CET1 ratio (core equity tier 1 capital) was 11.58%, providing a strong capital cushion for future growth.

Commitment to Priority Sectors and Financial Inclusion

Canara Bank exceeded mandated targets for lending to priority sectors and promoting financial inclusion. The bank achieved 46.08% of Adjusted Net Bank Credit (ANBC) in priority sector lending and 22.71% of ANBC in agricultural credit as of March 2024, surpassing the mandated targets of 40% and 18%, respectively. Canara Bank’s dedication to financial inclusion is further reflected in its performance exceeding regulatory norms for credit to small and marginal farmers (16.08% vs. 10.00% mandated target), weaker sections (22.36% vs. 12.00% mandated target), micro enterprises (9.92% vs. 7.50% mandated target), and non-corporate farmers (19.13% vs. 13.78% mandated target).

Looking Ahead

With a vast network comprising 9604 branches and 10209 ATMs, Canara Bank continues to expand its presence across diverse geographies. The bank’s new digital initiatives, including integrated mutual fund platforms, pre-approved digital lending, and enhanced mobile banking features, aim to enhance customer experience and drive digital adoption.

Canara Bank’s performance in Q4 FY24 paints a promising picture for the bank’s future. The bank’s ability to expand its global and domestic business, coupled with improved profitability metrics, suggests a strong foundation for sustainable growth. While the decline in non-performing assets is a positive development, continued efforts to maintain this trend will be crucial. Canara Bank’s commitment to financial inclusion by exceeding targets for priority sector lending is commendable and positions the bank to contribute to broader social and economic development.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.