Canara Bank has posted a net profit of Rs.3.07 billion during the second quarter (July-September) of the current fiscal (2005-06), but registered a decline of 23 percent during the same period in the last fiscal (2004-05) at Rs.3.97 billion.

Sequentially, however, the net profit rose by 64 percent from the last quarter (April-June) of the current fiscal in spite of making a total provision of Rs.2.75 billion, including provision of Rs.1.65 billion for NPAs (non-performing assets).

"On sequential basis, the bank's performance in the second quarter (Q2) has improved markedly despite structural rigidities in the market, pressure on interest spread and rising trend in operating cost," Canara Bank chairman M.B.N. Rao told reporters here.

Canara Bank is one of the leading scheduled banks in the country.

On annualised basis, the bank's net profit for the first six months (H1) of the current fiscal (FY 2006) also declined to Rs.4.93 billion from Rs.7.33 billion in the corresponding period of the last fiscal, registering a decline of 33 percent year-on-year (YoY).

"The YoY decline in the net profit during the first half this time is due to lower returns from subdued treasury operations, as against Rs.2.5 billion interest income in the same period of the last fiscal," Rao said.

Similarly, the operating profit for the second quarter at Rs.5.81 billion is higher on sequential basis despite slack treasury profits, which is an industry trend, and one-time additional provision for wage arrears.

The total income rose to Rs.24.94 billion from Rs.22.06 billion, an increase of 13.05 percent YoY, while interest income grew by 14.22 percent to Rs.21.01 billion from Rs.18.40 billion YoY.

"Prudence in NPA management and credit administration enabled us to reduce the net NPA ratio by 42 basis points to 1.46 percent from 1.88 percent a year ago. Net NPA level was also brought down to Rs.9.49 billion in Q2 from Rs.14.98 billion a year ago," Rao disclosed.

Global business increased by 22 percent to Rs.1,678.75 billion from Rs.1,377.26 billion, with deposits recording a YoY growth of 15.07 per cent to Rs.1,027.36 billion from Rs. 892.85 billion.

The bank has set an aggregate business of Rs.1,820 billion for the entire fiscal year ending March 2006, projecting a YoY growth of 15.68 percent, comprising Rs.1,100 billion under deposits and Rs.7,200 billion under advances.