BENGALURU: Canara Bank has significantly improved its asset quality over the recent years, and the bank aims to recover Rs6000 crore from bad loans during the second half of the current fiscal
This reflects a broader trend of strengthened recovery efforts and reduced non-performing assets (NPAs) within India’s banking sector.
Significant strides
Over the years, Canara Bank has made significant strides in improving its asset quality and strengthening recovery efforts, and FY24 has been a notable year in this ongoing process.
In FY24, Canara Bank’s gross non-performing assets (GNPA) dropped to 4.61 per cent, a reduction from 5.35 per cent in FY23. Similarly, its net NPA declined to 1.27 per cent from 1.73 per cent, indicating a continued focus on enhancing asset quality.
The improvement is a result of both stringent underwriting standards and effective recovery efforts, with the bank successfully recovering R2,905 crore in the second quarter of FY25 alone.
Focus on NPA recovery
The managing director, K Satyanarayana Raju, mentioned that the bank aims to recover another Rs6,000 crore in the second half of FY25, including Rs3,000 crore in Q3.
Financially, Canara Bank also delivered strong results. The total operating income rose to Rs1.27 lakh crore in FY24, a 23.7 per cent increase from Rs1.03 lakh crore in FY23.
Its net profit after tax (PAT) for FY24 climbed to Rs14,554 crore, up from Rs10,604 crore the previous year, marking substantial growth driven by improved operational efficiency and better asset quality. Key performance indicators like Return on Average Total Assets (ROTA) improved, rising to 1.04 per cent from 0.83 per cent in FY23. Additionally, the bank maintained a high Liquidity Coverage Ratio (LCR) of 129.04 per cent, comfortably above the regulatory requirement.
Banking sector did well on bad loans
In the broader context, India’s banking sector has seen heightened NPA recovery activity in recent years, as banks across the board work to clean up their balance sheets.
The regulatory push and new recovery mechanisms, such as the Insolvency and Bankruptcy Code (IBC) and the Asset Reconstruction Companies (ARCs), have helped facilitate faster and more efficient resolution of stressed assets.
State-owned banks like Canara have been at the forefront of this shift, increasingly prioritising NPA reduction, asset quality improvement, and better governance practices.
With continued recovery efforts and positive financial indicators, Canara Bank is positioning itself as one of the stronger performers among public sector banks, and it will likely aim to build on this momentum going forward into FY25.
