Earnings Outlook
Canara Bank Oct-Dec PAT seen muted as NIM seen moderating
This story was originally published at 21:59 IST on 23 January 2025
Register to read our real-time news.Informist, Thursday, Jan. 23, 2025
By Kabir Sharma
MUMBAI – Canara Bank is seen reporting a modest growth of 3.7% on year in its net profit for the quarter ended December, as interest income and margins are expected to remain largely unchanged, according to estimates from five brokerage firms. The state-owned bank's bottom line is seen at INR 37.91 billion as per the average of estimates from five brokerages, with the inputs ranging from INR 35.38 billion to INR 40.60 billion.
The bank is scheduled to declare its earnings on Monday. Shares of the bank closed 0.3% higher at INR 98.15 on the National Stock Exchange on Thursday. Shares of the bank have fallen 5.3% since Oct. 29, when it had released earnings for Jul-Sept.
Brokerages expect the net interest margin of the bank to remain flat sequentially due to a slowdown in credit growth and a rise in the cost of deposits. The management of the bank had said while declaring the earnings for Jul-Sept that the pressure on margins is expected to continue for one or two quarters. The net interest margin of the bank moderated to 2.88% in the Jul-Sept quarter from 2.90% a quarter ago.
"Credit growth is expected to remain soft, as also are margins, weighing on profitability, while the bank has a sizeable exposure to RINL (Rashtriya Ispat Nigam Ltd.), but may not recognise it as NPA yet," Emkay Global Financial Services said in a note.
Net interest income of the bank is seen largely unchanged on year at INR 95.24 billion in Oct-Dec, compared with INR 94.17 billion in the year-ago period, according to brokerages. Net interest income was up 4.63% on year at INR 93.15 billion in Jul-Sept.
Bucking the industry-wide trend, the asset quality of the bank is expected to improve further in Oct-Dec. The gross non-performing asset ratio improved to 3.73% in Sept. 30 from 4.14% reported a quarter ago and the net NPA ratio was at 0.99%. "We do not expect any major surprise on asset quality in this quarter," Kotak Institutional Equities said in a report.
Motilal Oswal Financial Services Ltd. said that advances and deposit growth will be the key monitorables. Global gross advances were up 9.53% on year at INR 10.12 trillion as of Sept. 30 and global deposits rose 9.34% at INR 13.47 trillion.
Brokerages also expect the credit cost of the bank to remain on the higher side as non-performing loans of the bank are still above industry peers. Following are the Oct-Dec earnings estimates for Canara Bank based on reports from five brokerage firms in descending order by the estimate of net profit:
| Brokerages | Net Interest Income (in INR million) | Net Profit (in INR million) |
| Emkay Global Financial Services Ltd | 94,596.00 | 40,601.00 |
| Motilal Oswal Financial Services Ltd | 96,112.00 | 40,142.00 |
| Kotak Institutional Equities | 95,293.00 | 37,334.00 |
| Nuvama Wealth Management Ltd | 93,600.00 | 36,100.00 |
| JM Financial Institutional Securities Pvt Ltd | 96,618.00 | 35,381.00 |
| Average | 95,243.80 | 37,911.60 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
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