The rise in Canara Bank’s share price comes after the lender reported a net profit of Rs 4,774 crore in the second quarter, up 19% from Rs 4,014 crore in the same quarter of the previous fiscal. However, the PSU bank reported a marginal decline of 2% in its net interest income to Rs 9,141 crore, compared to Rs 9,315 crore in the corresponding quarter of the previous year.
The bank reported a 12.20% year-on-year increase in operating profit to Rs 8,588 crore, supported by strong growth across key business segments.
Global business grew 13.55% year-on-year to Rs 26,78,963 crore, driven by healthy momentum in both global deposits and advances. Global deposits rose 13.40% to Rs 15,27,922 crore, while global advances rose 13.74% year-on-year to Rs 11,51,041 crore, reflecting robust credit demand and continued business growth.
In terms of asset quality, the bank has achieved significant improvement, with gross non-performing assets (GNPA) declining by 138 basis points year-on-year to 2.35%. Net NPA also declined by 45 basis points to 0.54%, underscoring the bank’s effective credit risk management and prudent lending policy.
Credit costs improved to 0.68%, down 29 basis points year-on-year, indicating better asset quality and controlled slippages. The Provision Coverage Ratio (PCR) further strengthened to 93.59%, up 270 basis points year-on-year, underscoring the bank’s strong provisioning buffers. Return on assets (ROA) improved to 1.12%, up 7 basis points year-on-year, reflecting improved operational efficiency and profitability. Further momentum in PSU banking stocks like Canara Bank also comes from foreign investors, policy buzz and improving balance sheets. The rally was boosted by speculation that the government may increase the limit on foreign ownership in PSU banks from 20% to 49%, a move that could reshape the sector’s investor base.
According to Nuvama Institutional Equities, such a change could generate as much as $4 billion in passive inflows.
“If there is any truth to this development, PSU banks could easily rise 20-30% in anticipation of such huge inflows,” Nuvama said. The broker estimates that Canara Bank alone can attract $305 million in foreign flows.
Also read: Godrej Consumer shares rise 6% as Goldman Sachs raises target after Q2 show. Should you invest?
At around 10.45 am, shares of Canara Bank were trading at Rs 140, up 2.6% from the last close on the NSE. Canara Bank shares are up 45% in the past six months.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of the Economic Times)
#Canara #Bank #shares #rise #sessions #hit #52week #high #fuels #spike