Tag: Tier-II

Canara Bank Q1 profit rises nearly three-fold to Rs 1,177 cr, BFSI News, ET BFSI

Banking & Finance

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New Delhi, Jul 27 () Canara Bank on Tuesday reported nearly three-fold jump in standalone net profit at Rs 1,177.47 crore for the quarter ended June 30, helped by reduction in bad loans. The public sector lender had logged a net profit of Rs 406.24 crore in the same quarter of the previous financial year.

During the June quarter last year, Canara Bank had amalgamated Syndicate Bank into itself with effect from April 1, 2020.

Total income in the April-June increased marginally to Rs 21,210.06 crore, from Rs 20,685.91 crore in the year-ago period, Canara Bank said in a regulatory filing.

The bank’s gross non-performing assets (NPAs) declined slightly at 8.50 per cent of the gross advances as on June 30, 2021 as against 8.84 per cent at June-end last year.

Net NPA ratio too fell to 3.46 per cent, from 3.95 per cent in the same quarter a year ago.

As a result, provisions and contingencies for the first quarter came down to Rs 3,728.52 crore as compared to Rs 3,826.34 crore in the year-ago period.

Of this, provisions for NPAs significantly reduced to Rs 2,334.88 crore, as against Rs 3,549.99 crore a year ago.

The Provision Coverage Ratio (PCR) improved to 81.18 per cent as at June 2021, from 78.95 per cent as at June 2020, the bank said in a statement.

Capital adequacy ratio of the bank stood at 13.36 per cent as at June 2021. Out of which Tier-I is 10.34 per cent and Tier-II is 3.02 per cent, it said.

The bank said it plans to raise Rs 9,000 crore through a mix of debt and equity to enhance capital base to fund its business growth during the current fiscal. DP DRR DRR



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Ind-Ra, BFSI News, ET BFSI

Banking & Finance

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The Government’s plan to privatise two public lenders could lead to a material negative migration of long-term issuer ratings, as well as ratings on Tier-II instruments of the banks, specifically amongst the weaker non-consolidated ones, said India Ratings (Ind-Ra). The ratings agency said the government’s outline of privatising, rather than divesting, could translate to ceding both the majority shareholding as well as control over the banks – which have not been formally identified yet.

“The agency believes ceding of control should make the proposal attractive for potential investors and may make it more viable to attract a large quantum of capital that this exercise may require,” said Ind-Ra in its assessment.

The ratings agency said it had a long-term issuer rating floor of IND AA, for government majority owned banks, which factored along timely government intervention and thus, minimal default probability. Hybrid instruments, such as AT-1 instruments, were rated on their standalone profiles – which factored in ordinary support from the government, largely due to the terms of Hybrid instruments which could prevent government support. “Ind-Ra’s rating of AT1 instruments for weaker government banks could be multiple notches below the long-term issuer rating, factoring the inherent weakness of the institutions along with discretionary nature of the security which could impact its ability to service the instrument,” noted the agency.

Ind-Ra, citing the example of IDBI Bank, the only lender the government has thus far ceded majority control in, said it would as per its criteria place the ratings on a rating watch, and accordingly take rating calls based on the ‘final contours’ of the transaction.



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