Canara Bank vies for recovery of Rs 650 crore of its NPAs

Mumbai:
18 September 2003

This will help the bank to bring down its gross NPAs further, leading to a lower provisioning requirement in the coming years. Its net NPAs are at 3.6 per cent, which is the lowest among the five largest banks in the country. The net NPAs are projected to fall to 3 per cent by FY04.

Earlier, Canara Bank''s profitability was affected due to higher provisioning on account of the losses incurred by Canfina, a wholly owned subsidiary, which went into trouble during the 1992 security scam. The total provisioning held for Canfina by end-FY03 is Rs 400 crore, which is sufficient to meet future obligations till 2007.

Canara Bank, the third largest public sector bank with an asset base of Rs 82,000 crore ($18 billion), has been quite aggressive in recovering its bad loans in the past two years.

One of the biggest beneficiaries of the recent fall in interest rates, and with one of the largest investment portfolios in the banking sector, Canara Bank has been a major beneficiary of the fall in interest rates in the past two years.

As of financial year 2003, unrealised gains in its investment portfolio stood at Rs 3,900 crore. In the buy-back programme of government securities done in July 2003, the bank swapped more than Rs 1,300 crore of high-coupon securities.

Large treasury profits from its investment portfolio are helping the bank clean up its balance sheet and also invest in technology for better business prospects in the coming years.