Canara Bank stock falls on poor asset quality

The Canara Bank stock tanked on Monday after the public sector lender posted earnings below expectations on deteriorating asset quality.

For the quarter ended March 2015, the bank posted net profit of Rs 612.96 crore, up 0.35 per cent, against Rs 610.83 crore in the corresponding quarter a year ago.

Total expenditure of the bank increased by 10 per cent year-on-year (yoy) to Rs 10696.68 crore at the end of the quarter under review. The rise in total expenditure can be attributed to rise in employee cost and other operating expenses.

Net interest income (NII) fell 1.9 percent to Rs 2,486 crore during January-March quarter compared to Rs 2,535 crore in the same quarter last year. NII is the difference between interest earned and interest expended.

Asset quality of the bank weakened in the last quarter of FY15. During January-March, gross non-performing assets (GNPA) of the company jumped to Rs 13,039.96 crore, up 72.25 per cent, against Rs 7,570.21 crore in the corresponding quarter a year ago.

Net NPA ratio increased to 2.65 per cent for the quarter ended March 2015 from 1.98 per cent as at March 2014 and from 2.42 per cent at December 2014.

The stock tanked 5.10 per cent to Rs 335.20 on the National Stock Exchange. During the day, it touched a high of Rs 359.80 and low of Rs 334.25.